Thursday, 6 September 2018

CAIIB single link for all recollected

CAIIB ABM TODAY EXAM 55 QUESTIONS RECOLLECTED by Srinivas Kante 1.Hicks -Hansen synthesis 2.Basic difference between IS and LM curve 3.Increase in money supply Lowe interest rate and raising inflation 4.NDP @factor cost 5.Demand –pull inflation means 6.Erosion as per the role 7.Climate Survey 8.Case study one related to Budget 9.Central limit theorem 10.sampling methods . 11. job erosion 12 curreneaccountdefficit 13 Gross deficit etc. case 14..standard deviations mean related 15 .Case 3 Xyz jewellery shop Related But the level oh complexity is very high..n .. 16 fiscal policy ,monetary policy 17.demand supply curve etc... 18.Correlation and regression numerical 19.NNP @ factor cost 20working capital 21. bank guarantee 22.Performance Appraisal 23. Halo effect Tendency.. 24.NNP at market price 25.In correct characteristics in Business cycle 26 Notional income also known as.. 27.Least squre method used in.. 28.Fctoring of services the factor 29.Lender to sensitising test and scenerion analysis..Type of loans 30. Debt to equity of enter prises raatio is.05 its... 31.Bank Gaurantee to commoidity brokarage (margin %).. 32.find P(x bar >/85) ? 33Std error of the mean is???? 34 Estimate of the population proportion is.. 35 Commericial paper issued multiples of.. 36.Commericial paper issued maximum period 37.Find P(88| 39.HRM 40.monetary policy 41.Annuity due prblems 42. Future Value problem 43.Estimation 44.Bond price 45.Revenue dediciat problem 46.Job evealution Job specfication case study 47. Turn over methodeapplied on leass than 5 cr 48. Factor of Supply schedule 49.Lional econmic statement. 50. GDP calculation 51. GNP at amrket price calculation 52. Sampling Methodes 53.Hallo effect 54 Cov(X,Y)=150 mean X=20 mean Y=10 standard deviation x=25 then equation of regression line is 55. 3 questions from HRM 5 marks each
Today CAIIB BFM Recollected questions by Srinivas Kante June 10 , 2018

1.Most of the questions from foreign exchange    numericals
2. case study on DGAP, Leverage ratio
3. case study on LC
4. Risk weight on Housing loan
5.Diffence between basis risk, gap risk, and yield curve risk
6. Letter of credit related
7.Capital charge for PR questions
8.Problems on NII
9.YIELD On T BILL
10 .Tier 1 CRAR
11.Call risk
12.NRE ,NRO, FCNR account related
13 Beta factor and basic indicator approach
14.The main object of the LRM loan review mechanism
15.The notional transit period permitted ..
16. One case study on asset liability management
17. Exchange fluctuation risk of ecgc
18. Rupee account... nostro,vostro,loro,mirror are in option
19. case study on TT buying, selling
20. RAROC,Who decide maximum limit of risk
21.Corporate debt instrument characteristics
22.Basel 3 bank apply – for computing capital requirement from existing risk..
23.residual risk also known as..
24.Elements of common equity Tier 1 cap
25.In repo transaction in G-sec , the settlement carried in  first leg is ------------ basis
26. BASEL 3 going concern capital is
27.Liqidity risk is a type of time risk??
28.GOI not issue T bill with ------------maturity days
29.Notice money market period is…
30Duration is the elasticity of the bond
31.In CP Buy bank offer may not be made before ----days
32.Features of hedging , Int, Arbitrage ,trading , Investment
33.Nostro Accounts are – accounts
34.Emp option risk about pre closure
35. Feature of CCB  BASEL 3
36.FX clear is a forex dealing sym developed by
37.Features of CRR
38.Calculation of LCR under level1  Asset
39.Cross rate
40.Charactristics of foreign exchange market
41.Temporary Asset--- revaltion not present
42.Calculation of capital for General market risk
43.In stock of HQLA for the purpose of cap liquidity coverage ratio…
44. BCBS introduced new approach called..
45.Instrument having lower demand and trading…
46 In india short position allowd..
47.Features of LCR
48.Rapid Growth period bank can make…
49. RAROC,Who decide maximum limit of risk
50. case study on TT buying
51. what does CRR impact
52. no.of key  priniciples in Supervising review process
53. Features of CCB in BASEL 3
54..5 marks case study from CALL and PUT option
55.Rupee account Vostro or Mirror?
56. Calculate price for a 270day CP having face value 100/- when yield is 7.57%?
a. 94.6970,a. 94.6770, c. 94.6570, d. 94.6370
57. Calculate yield on a 182 day T bill issued at 97.30/-?
a. 7.57,b. 7.75, c. 5.57, d. 5.75%
58.no.of key priniciples in Supervising review process
59. Features of CCB in BASEL 3
60. 1.yield in tBill
61.rwa
62. Case study o. Nii and nim
63. Case study on rwa and capital charge
64.case study on leverage ratio
65. Case study on lc , advising bank confirming bank etc
66 case study on foreign exchange
67. yield to maturity 02 questions asked
68.call money Nd term money
69. Approach basic indicator approach , advance approach
70. M duration
71. piller 3 ,spr
72. 5 marks case study from CALL and PUT option
73. NII - 5marks
74.CRAR - 5marks
75.FEDAI - 5marks
76.Exchnge rates- 5marks
(USD to INR)
77.Exchange rates - 5marks
(USD - Jap yen - GBpound)
78. Lc - 5 marks
79 DGAP nd Levarage ratio - 5marks
80.5 questions on USD JPY against foreign person returning to India  


CAIIB Retail Recollected 2018 June ::
Recalled questions 

Bbps
Case study on hl income tax claim
Fv n pv
Fsi
NFS details
Credit card
Free charge
Emi Calculation, Rule 72, Questions on CIBIL,  SLM and WDV
 housing loan cs education loan cs bbps cs ekyc depriciation cs question on time value of money and also more and more question on theory part

 Case study on
BBPS
HL income tax
CKYC
Depriciation
Case study on
Bcsbi 5 que
 Imps,UPI, *99#,mmid
[Credit card 5 que
 Sarfasi,, lokadalak, drt 5 que
Car loan new oold car 5; questions
Housing loan tax benefits 5 que
 Slm , wdv depreciation 3 que
Fund transfer mobile banking maximum    per transaction and max per month per beneficiary
[Sub prime loan
[Bank charges under charge against future receivable        cersai form 1 or 2 or not applicable
 Mortgage act
[ RTGS and neft
 Method of valuation of land and buildings which is to be attached as security for bank
 Product development stages
Rule 72 compounded annually  doubles in 7 yrs and 6 months option 9 .6,10, 9.3,9

 Demat account can be opened in banks or DPS or brokers
If a bank issue card to customer and 10 lakh insurance cover what type of card bank issue rupay, visa, master, mastro
 If credit card a person purchases for 12000 at 37.20 annually.               Per month interest.  Per day ,, if he pays within time limit what is the interest charged

How can a bank protect themselves if he is relieving information about the customer
Ombudsman settlement

Kyc aml

  • Dispute between banks and reconstruction company securitization

[Back loading emi
 If a person wants to invest in a 10 yrs  pention plan  plan name?? Pmjsy, pmvvy, Jay,jsy
[Machinery value 1200 lakhs salvage value 300. End of 6 yrs under wdv method 15%
When salvage value become zero

Dep under straight line method
Cumulative depreciation value of 3rd 4th year under wdv


CAIIB HRM Recollected questions

Organic structure organization definition

Definitions for norming and performing (stages of group development) 

Questions on six leadership styles (5 questions asked) 

Definition of process diagnosis(in bpr implementation) 

Identify best practices in change management

Key factors for successful implementatition of change within organization

Chief insecurity of most staff is change itself

Identify steps to successful change propsed by John p kotter

Responsibility charting is foundation for strong delegation

Forecasting activities in human resource planning include

What are two types of knowledge

In RAKID R stands for

Commonly used knowledge management tools are online discussion forums,  online conferencing,  communities of practice

Employees and managers can be classified in 4 categories.  Identify-activist, reflector,  theorist and pragmatist

Characteristics of training new generation - it should be short,  entertaining,  allows freedom

Problem on ROI

Definition of ROI

Types of motivation

Definition of motivation

Lowest need in need hierarchy theory

Which of the following is not hygiene factor-recognition

Goal efficiency is effected by- proximity,  difficulty and specificity 

According to Steven reiss motivation theory,  how many basic desires?  16

Status is defined as need for social standing and importance

Human resource implications 

Augmented learning-learning where learners interact with e learning environment 

What are 3 domains of learning - cognitive.  Psychomotor and affective

Psychomotor involves what characteristics

Principles of learning -  readiness,  exercise. Intensity and recency

One question on perception

Adult learning feature identify the wrong one

Definition of functional comptency

External factor effecting demand forecasting

One of the following is not advantage of external recruitment 

Question on body language

What are the legislation on working conditions.  Identify wrong act

Registering trade union gives then legal status

One of the following is not a social security act




BFM Recollected questions::


Daily votality is 5% 2.5 Find modified duration - Ans is 2.38
STRIPS (Separate Trading of Registered Interest and Principal Securities) is a ...... zero-coupon securities
Which is not a derivative product ? - Repo (Swap, Option, Forward, Repo)
ECB limit - USD 500 mn up to minimum period of 5 years and USD 20 mn up to minimum period of 3 years without prior approval of RBI
ECB is denominated in which currencies.....USD, Euro or JPY
Consessive rate of interest on postshipment rupee export credit to gold card status holder can be extended maximum - 365 days
One importer want import one machine from China.He has to open lc. The exporter wants advance payment. What type lc - red clause
Value at risk is a measure of? Gap risks in foreign exchange operations
Which office not under treasury ? Options given r Mid office, back office, front office, legal office*, 
Under standard assets, provision for loss, RSV should be?? Ans - less than 10%
If interest of principle is not serviced for 90 days, what is the position of account? ans- outof order
Basel 3 teir 1 components. (Plz remember that Revaluation reserve is also now under Teir 1)
If treasury assets r withdrawn before maturity, what type of risk is it? ,
A 91 Day T bill of 93.21 wl have yield of? 
If 91 days treasury is 88., then its implied yield is?
ICAAP is related to? 
ADR related question
Double forward is called what ?
Related to Nro account
Nro account can be opened as sb,CA,FD type
Derivatives also lot of questions
Advising bank roles ... Like what he can do what can't
INCOTERM
IRS
Swap
Risk weightage
Lot of RWAs questions
Which is not included in calculation of NDTL/DTL for CRR/SLR
Component of tier 1
Rwa as per Basel III for housing loan based on LTV
Many questions sellect correct or incorrect about NRO NRE FCNR ECB EEFC CCIL
Estimated occurence of probability
Questions on currency derivatives, forwards, swaps
Forex market characteristics
One question related to embedded option risk
As per basic indicator approach calculation of capital charge 15% of average gross income over there years given but one of the year is having negative one that we have to ignore.
8.83GS2023price100.49 with yield 8.75 .....just it is given and based on this statement he asked for 5marks
Crystallization period for export
One question on American and europian option
Capital charge on operational risk based on standardized approach and basic indicator approach
Questions on ADR AND GDR
Questions on option and forward contact, future
Loan To Value Ratio
Risk Weight %
Swap Defination , ADR and INCOTERMS

RWA calculation for operational risk under Standardized approach
DGAP
Conceptual question on FCNR, RFC, NRO, NRE
Operational risk calculation all approaches
Modified duration
Tier 1 n tier 2 numerical
LC based case studies for 5 marks
Basic inducater appoach market risk 5 number
Modified duration of equity5 ques
Calculations of capital adequacy ratio quite a few questions
10 questions at from various risks associated with Treasury operations
Interest rate swap 5 questions
Bill buying 5 questions
EXCHANGE RATE
AAA A BB Rating Chart Questions for Risk Weighted Calculations
Yield Calculation
W RSA,RSL NUMERICAL
RATED BOND NUMERICAL
Yeild of bond numerical
BASIC INDICATOR APPROACH NUMERICAL
BPV
Forex t.bill 
Leverage 
Forward contact
CRAR
Operational risk
Treasury theoritical
60question theory easy
No ques from volatility and bpv
Call risk problems
packing credit problems
Rsl. Rsa.. Md problems
Leveage ratio related case study
BASEL III Tier 1 Tier 2 capital Minimum equity ratio related 
BFM Book page no 415 ICCAP related question
BFM Book page no 443 stock approach related 05 question
BFM Book page no 477 - RSL/RSA/DGAP/Modified Duration Gaps
BFM Book page no 20 - Export Bill 5 marks
BFM Book page no 295 - Estimated level of Operational Risk 

Case study numerical-TEIR 1 TEIR 2 CAPITAL CONVERSION BUFFER QUESTION BASEL ON BASEL3
Case study on RFC account 5 marks
Case study on forex exchange buying commission etc 5marks
Case study on mkdified duration gap 5marks
VAR - 1 QUESTION 
TEIR 1 COMPONENT-2 QUESTION
CBLO- 1 QUESTIOn

Case Studies on
1. Cancellation of contract
2. NRE/NRO POA
3. RWA
4. MEAN & SD
5. SLR
6. YTM
7. SHORT LERM & LONG TERM GAP ASSET VS Liabilities
8. NII & NIM
9. Tier1, Tier2
10. Capital adequecy
11. Nostro Vostro Loro
12. Daily volatilty
13. Stop loss limit
14. Operational risk case study
15. Foreign exchange numericals
16. Swap numericals
17. Liquidity case study
18. Forward rate agreement 25 crore 3 month swap, three year three business line calculate yield and risk weightage
19. Calculate CET Basel 3
20. Calculate Aadditional tier 1
...........................................
2 to 3 question duration
5 question export bill(cancellation of contract rate, margin amount,rebook rate,etc)
5 question on capital adequacy (balance sheet provided, compute equity capital, tier 1 capital, total rw, capital adequacy, buffer capital)
5 question on nostro,loro vostro
5 question on FRA 
5 question on net interest margin 
2-3 question on bonds
3-4 question on LC
some 2-3 sums on bpv
...........................................
1. Rate qoute 1 ques
2.LC partial delivery UCPDC rule
3.FRA 6*9 dates of delivery and maturity
4.case study on rules and guidelines regarding NRE, NRO and FCNR accounts- amt of loan,POA,remittance,fund transfer limit etc
5.coupon swaps,forward contracts
6.securitization-SPV or Commercial bank allocation of assets 
7.Case study on NII,NIM,EER
8.Case study on Cash flows,deviation during years,SD/mean
9.ECGC insurance premium bear by?
10.CHIPS-USA
11.treasury risk management 4-5 ques
12.European put option
13.Authorises person categ 2
14. ques on BOP expansion 
15.bank margin calculation from rates 
16.Stop loss given- asked whether buy or sell at what rate to book profit or stop loss
17.monthly volatility given-calculate daily volatility 
18.modified duration calculation 
19.case study on Nostro Vostro and Loro and Mirror accounts
20.which is not an off balance sheet item of following 
21.crystallisation of sight bills 30 days
22.LC date expired due to bank closed due to hurricane UCPDC rule
23.standard ECGC policy cover-political risk
24.basel III - tier 2 capital req of total risk wtd assets, pillar 3 def
25.standardised approach and basic indicator approach and AMA all methods for operational risk calcualtion
24. volatility can also be measured by?
25.price volatility depends on yield volatility,BPV,Yield and price
26.VaR related 2 ques theoretical
27.derivatives hedge underlying risks
28.call risk
29.Maturity ladder or baskets case study
30.provision coverage ratio def
31.asset liability mismatch

32. Bond ytm,current yield 2-3 ques


CAIIB RETAIL BANKING PREVIOUS YEARS RECOLLECTED QUESTIONS BY Srinivas Kante

1. Sukanya samridhi yojana
2. Atal pension yojana
3. Basic saving ac - 1 qtn
4. Customer relationship management
5. Full form of CIA
6. one on IMPS
7. future value 2 qtn
8. BCSBI 7 qtn
9. Education loan 5 qtn
10. Who give subsidy on mudra loans?
11. One question on rule 72?
12. Ordinary annuity one question?
13. Product stage
14. Mobile banking limits?
15. Safety esteem self actualization
16. Reliability responsiveness
17. ROC pulling
18. Max limit for prepaid instruments, expiry of prepaid instruments
19. Mudra loan - It is 50000 to 10 lakhs
20. 80c rebate? - Rs. 1.5 lakhs
21. Withdrawal allowed in ATM's?
22. CERSAI is formed under which act?
23. Many questions from retail banking services
24. Reverse mortgage
25. Para banking
26. 80C limit
27. PM fosol bima yojona
28. CTR
29. CERSAI - which act
30. PMSBY - claim amout after losing one eye or one leg or hand
31. PMEGP - implemented through
32. POS
33. EWS_size
34. RML
35. CRM gap-iii between
36. Merchant banking means
37. Closed ended fund
38. APY
39. Advantage and disadvantage of retail banking
40. Limit of cash withdrawn from other bank ATM. Option 5000, 100000, 20000, 2500
How many neft settlements in a day?
Tax benefit in Home loan
Credit card cycle
NEFT/RTGS max n min limit
Basic diff.b/w rtgs n neft
Benefit of pvt. Banking
Wealth mgmt for corporates
Education loan repayment/defaults
EMI
Income tax
Rule 72
Essence of crm
Bharat bill paymnt systm
Priority of charge in mortgage
Brown label atm
Purpose of securitisation
Conditions for pension fund mgmt
Mutual fund conditions for bank
Approval for insurance
Propagate model
7Ps
ATM transactions in metro cities
SARFAESI
DRT
Internet banking
Mobile banking
Internet Banking- strategy adaptation
Depreciation by both methods
Capital gain
Annuity
FSI Calculations
Full form of CDO
Product meaning??
Airline company used which model..SBU..INTEGRATED MODEL???
RUPAY card is issued by NPCI
Case study related to Internet banking 5 questions
Case study related to credit card charges and other
Register mortgage date and deposit of title deed
Implementation model related
WRBR.. Full form??
Date of execution of documents.. 4 months
Augmented product...
Expected product...
Under NEFT, number of settlement on week days are..12
RTGS minimum and maximum amout...
Disadvantages of Retail banking...
Mobile banking maximum amout per txn and monthly threshold related 5 questions
IFSC CODE TOTAL ALPHA..and numerics
SFMS
Question on hni, super hni, ultra hni category..
Wether the cibil report can be given to customer after levying some charge or not..
Whether moratorium is given for second hand car...
Moslow theory : Case study on needs
RTGS : when processing
Education loan : case study about margin
On college fee hostel fee computer fee other expenses..
WDV : Case Study on Depreciation l
Credit Card : Case study on interest , risk , overdue amount....
Valuation of urban land ,agriculture land Method criteria etc.....
NEFT : 12 batches
Super affluent : 50-400 Lakhs
Case study on wdv method
Three questions on rent capitalization method
Case study on maslow hierarchy
Case study on tangibles..assurance..responsivess wale 5 factors
Emi calculation 2 questions
Theory was easy
Sbu 1 question
Horizontally organized model
credit card bill (case study 5 qus.)
Three questions on rent capitalization method
Neft batches - 12 batches
depreciation numerical...
case study on gift card...
Fullform of USP - Unique Selling Proposition
case study on education loan for abroad...
1. 2 Case studies on priority charge on mortgage
2. Problem on depreciation(By WDV)... eg. Wht will be the book value after 3 years?
3. Calculating future value
4. Diff between NEFT and RTGS
5. Questions on DSA
6. Case study on tax exemptions ( both interest and principal repayment)?
7. Prob on Depriciation by straight through method?
8. What does securitisation means?
9. Risk involved with DSA?
10. Questions on Potential product PROPAGATE?
11. EMI Calculation
12. Questions on vertical, horizantal model
13. How Many NEFT settlement on weekdays and saturday
14. How many characters in UTR?
15. Question on WRBR
16. Case study on education loan... all the fig are given ( eg. Hostel fee, tution fee,
other expenses and bank margin).... we have to calculate max permissible bank loan
17. One critical case study on credit card... credit card limt, free int period, int rate, over
limit penalty, due date and purchase date are given... We have to calculate int chraged
a. if the customer pays the amt due after 18 days from due date
b. If he pays half amt before due date then calculate int charged for remaining amt on a
particular date?
C. If the amt cro sses the limit then calculate the amt he has to pay
18. If we allow overdraft in CC a/c and the customer does not repay it, then can we
approach DRT ? There are four options and we have to choose the correct one
How many neft settlements in a day?
Tax benefit in Home loan
Credit card cycle
NEFT/RTGS max n min limit
Basic diff.b/w rtgs n neft
Benefit of pvt. Banking
Wealth mgmt for corporates
Education loan repayment/defaults
EMI
Income tax
Rule 72
Essence of crm
Bharat bill paymnt systm
Priority of charge in mortgage
Brown label atm
Purpose of securitisation
Conditions for pension fund mgmt
Mutual fund conditions for bank
Approval for insurance
Propagate model
7Ps
ATM transactions in metro cities
SARFAESI
DRT
Internet banking
Mobile banking

1. Case study on Prepaid instrument
2. Case study on Depreciation WDV and SLM methods
3. Case study on Bharat Bill Payment System
4. Case study on CERSAI
5. Case study on ekyc
6. Case study on car loan?
7. Case study on 'housing loan for all' by newly launched scheme
8. Case study on Vehicle loan
9. Case study on Credit card billing
10. Case study on Education loan problem
11. Case study on Future value of ordinary annuity
12. Case study on BCSBI - 10 questions (theory based)
13. Case study on Future value of bond/annuity
14. Case study on Maslow Needs
15. Case study on CRM
16. Case study on EMI
17. Case study on Capital gain
18. Case study on Calculate Present value
19. Case study on RML

Question on hni, super hni, ultra hni category..
Wether the cibil report can be given to customer after levying some charge or not..
Whether moratorium is given for second hand car...
Moslow theory : Case study on needs
RTGS : when processing
Education loan : case study about margin
On college fee hostel fee computer fee other expenses..
WDV : Case Study on Depreciation l
Credit Card : Case study on interest , risk , overdue amount....
Valuation of urban land ,agriculture land Method criteria etc.....
NEFT : 12 batches
Super affluent : 50-400 Lakhs
Case study on wdv method
Three questions on rent capitalization method
Case study on maslow hierarchy
Case study on tangibles..assurance..responsivess wale 5 factors
Emi calculation 2 questions
Theory was easy
Sbu 1 question
Horizontally organized model
credit card bill (case study 5 qus.)
Three questions on rent capitalization method
Neft batches - 12 batches
depreciation numerical...
case study on gift card...
Fullform of USP - Unique Selling Proposition
case study on education loan for abroad...
Numericals from book about
Encumberence ratio
Tax saving on HL
Case studies under IBA education loan
Calculation of PV FV
Case study on reliability, tangibility, assurance (customer expectations)
Masala bond
Prepaid instrument
MSME act
Full form of USP
Who heads DRAT?
Sum on WDV and SLM
................................. ......
Case study on UPI
AEPS
REVERSE MORTGAGE FOR SENIOR CITIZENS[RLEAC]
problems on straight line
WDV method
Educational loan on foreign study
5q on empathy,responsiveness,assurance
2q on augmented, core product
Reverse mortgage equity linked case study
FSI construction cost based
UPI based
80c/24(b) ICT act 1961 based
Priority sector in different sector with perc of ANBC
PROGATE full form
BBPS component
fraud in operation risk
straight line method
written down value method
encumbrance value
Home loan
Service quality based case study
PPI based case study
Total compound interest applicable
EMI
Present value and future value
Full form of MMID ?
UPI transaction max limit ?
Mobile banking per day and per month limit?
Housing loan % of priority sector?

Margin for RML (Reverse Mortgage Loan) with annuity ?

Practice Questions for AMFI Test

Practice Questions for AMFI Test



A close-ended mutual fund has a fixed :

NAV

fund size

rate of return

number of distributors

The maximum load that a fund can charge is determined by the :

AMC

SEBI

AMFI

distribution agents based on demand for the fund

The amount required to buy 100 units of a scheme having an entry load of 1.5% and NAV of Rs.20 is :
Rs.2000

Rs.2015

Rs.1985

Rs.2030

A gilt fund is a special type of fund that invests :

in very high quality equity only

in instruments issued by companies with a sound track record

in short-term securities

in government securities only

Of the following fund types, the highest risk is associated with

Balanced Funds

Gilt Funds

Equity Growth Funds

Debt Funds

The NAV of a mutual fund:

is always constant

keeps going up at a steady rate

fluctuates with market price movements

cannot go down at all

An open-ended mutual fund is one that has:

an option to invest in any kind of security

units available for sale and repurchase at all times



an upper limit on its NAV

a fixed fund size

An investor in a close-ended mutual fund can get his/her money back by selling his/her units:
back to the fund

to a special trust at NAV

on a stock exchange where the fund is listed

to the agent through which he/she subscribed to the units of the fund

The "load" charged to an investor in a mutual fund is

entry fee

cost of the paper on which the unit certificates are printed

the fee the agent charges to the investor

the expenses incurred by fund managers for marketing a mutual fund scheme

A mutual fund is owned by

the Govt. of India

SEBI

all its investors

AMFI

Units from an open-ended mutual fund are bought

on a stock exchange

from the fund itself

from AMFI

from a stock broker

A mutual fund is not

owned jointly by all investors

a company that manages investment portfolios of high networth individuals
a pool of funds used to purchase securities on behalf of investors

a collective investment vehicle

"Load" cannot be recovered

at the time of the investor's entry into the fund

as a fixed amount each year

at the time the investor exits the fund

from the fund's distribution agent

The most important advantage of a money market mutual fund is

 quick capital appreciation

 high regular income

 safety of principal

 no loads

Some close-ended funds are quoted at a discount to their NAV because

 of high expense ratios

 investors do not expect the current NAV to be sustained in future
 the repurchase price fixed by the fund in lower than the NAV

 of the inherent risk involved in investing in such type of funds

The NAV of each scheme should be updated on AMFI's website

 every quarter

 every month

 every hour

 every day

Debt funds target

 low risk and stable income

 protection of principal

 high growth with risk

 long term capital appreciation

In which of the following do debt funds not invest

 government debt instruments

 corporate paper

 financial institutions' bonds

 equity of private companies

Which of the following risks do not affect a debt fund

 default by issuer on payment of interest or principal

 price fluctuations of the debt securities

 share price movements

 interest volatility

Assured return or guaranteed monthly income plans are essentially

 Hybrid funds

Growth Funds

Debt/Income funds

Sector funds

A Fixed Term Plan Series is

an open-ended fund

a close-ended fund

a fixed term bank deposit

a fixed term corporate bond

NAVs of equity funds are not affected by

Stock market movements

Events affecting the industry/sector in which the fund has invested

Happenings in the companies in which the fund has invested

real estate prices

The greatest potential for growth in capital is offered by

debt funds

gilt funds

growth funds

balanced funds

A Systematic Withdrawal Plan, allows investors to get back the principal amounts invested in addition to the income on investment
True

False

Which of the following is untrue of an automatic reinvestment plan?

The plan allows for automatic reinvestment of all income and capital gains

Automatic reinvestment allows for accumulation of additional units of the fund

The major benefit of automatic reinvestment is compounding

The benefit of automatic reinvestment is often lost on account of the heavy load charge on the reinvestment

Constraints imposed by most funds on check writing are:

Account balance should not fall below the minimum capital required

Checks issued must be for at least the minimum amount specified.

Number of checks per month must not exceed a specified number

Both a & b above

The performance of a fund is largely measured by the success of

the marketing function

the operations function

the portfolio market function

none of the above

NISM related Abbreviations

NISM related Abbreviations

A/A
Articles of Association
ACE
AMFI Code of Ethics
AMC
Asset Management Company
AMFI
Association of Mutual Funds in India
AML
Anti-Money Laundering
ARN
AMFI Registration Number
ASBA
Application Supported by Blocked Amount
CAGR
Compounded Annual Growth Rate
CDSC
Contingent Deferred Sales Charge
CFT
Combating Financing of Terrorism
CVL
CDSL Ventures Ltd
DD
Demand Draft
DDT
Dividend Distribution Tax (Additional Tax on Income Distribution)
DP
Depository Participant
ECS
Electronic Clearing Service
F&O
Futures & Options
FCNR
Foreign Currency Non-Resident account
FEMA
Foreign Exchange Management Act, 1999
FII
Foreign Institutional Investor
FIRC
Foreign Inward Remittance Certificate
FMP
Fixed Maturity Plan
HUF
Hindu Undivided Family
IPV
In Person Verification
ISC
Investor Service Centre
KIM
Key Information Memorandum
KRA
KYC Registration Agency
KYC
Know Your Customer
M/A
Memorandum of Association
M-Banking
Mobile Banking
MF
Mutual Fund
Micro-SIP
SIP with annual aggregate investment less than Rs50,000
NAV
Net Asset Value
NBFC
Non-Banking Finance Company
NEFT
National Electronic Funds Transfer
NFO
New Fund Offer
NOC
No Objection Certificate
NPA
Non-Performing Asset
NRE
Non-Resident External account
NRI
Non-Resident Indian
NRO
Non-Resident Ordinary account
OCI
Overseas Citizenship of India
PAN
Permanent Account Number
PDC
Post-Dated Cheques
PFM
Pension Fund Manager
PFRDA
Pension Fund Regulatory & Development Authority
PIO
Person of Indian Origin
PMLA
Prevention of Money Laundering Act
PoA
Power of Attorney/ Points of Acceptance, depending on context
POP
Points of Presence
QFI
Qualified Foreign Investors
RBI
Reserve Bank of India
RTA
Registrars & Transfer Agents
RTGS
Real Time Gross Settlement
SAI
Statement of Additional Information
SEBI
Securities & Exchange Board of India
SID
Scheme Information Document
SIP
Systematic Investment Plan
SRO
Self Regulatory Organisation
STP
Systematic Transfer Plan
STT
Securities Transaction Tax
SWP
Systematic Withdrawal Plan
SWIFT
Society for Worldwide Interbank Financial Telecommunication

Debt, Equity and Hybrid Funds

Debt, Equity and Hybrid Funds
A scheme might have an investment objective to invest largely in equity shares and equity-related investments like convertible debentures. The investment objective of such funds is to seek capital appreciation through investment in this growth asset. Such schemes are called equity schemes.
Schemes with an investment objective that limits them to investments in debt securities like Treasury Bills, Government Securities, Bonds and Debentures are called debt funds. These debt securities are discussed in Chapter8.
Hybrid funds have an investment charter that provides for investment in both debt and equity. Some of them invest in gold along with either debt or equity or both. This category of funds is discussed later in this Chapter.

 Types of Debt Funds
Gilt funds invest in only treasury bills and government securities, which do not have a credit risk (i.e. the risk that the issuer of the security defaults).
Diversified debt funds on the other hand, invest in a mix of government and non-government debt securities such as corporate bonds, debentures and commercial paper. These schemes are also known as Income Funds.
Junk bond schemes or high yield bond schemes invest in companies that are of poor credit quality. Such schemes operate on the premise that the attractive returns offered by the investee companies makes up for the losses arising out of a few companies defaulting.
Fixed maturity plans are a kind of debt fund where the investment portfolio is closely aligned to the maturity of the scheme. AMCs tend to structure the scheme around pre-identified investments. Further, being close-ended schemes, they do not accept moneys

post-NFO. Thanks to these characteristics, the fund manager has little ongoing role in deciding on the investment options.
As will be seen in Chapter8, such a portfolio construction gives more clarity to investors on the likely returns if they stay invested in the scheme until its maturity (though there can be no guarantee or assurance of such returns). This helps them compare the returns with alternative investments like bank deposits.
Floating rate funds invest largely in floating rate debt securities i.e. debt securities where the interest rate payable by the issuer changes in line with the market. For example, a debt security where interest payable is described as‘5-year Government Security yield plus 1%’, will pay interest rate of 7%, when the 5-year Government Security yield is 6%; if 5-year Government Security yield goes down to 3%, then only 4% interest will be payable on that debt security. The NAVs of such schemes fluctuate lesser than other debt funds that invest more in debt securities offering a fixed rate of interest.
Liquid schemes or money market schemes are a variant of debt schemes that invest only in short term debt securities. They can invest in debt securities of upto 91 days maturity. However, securities in the portfolio having maturity more than 60-days need to be valued at market prices *“marked to market” (MTM)+. Since MTM contributes to volatility of NAV, fund managers of liquid schemes prefer to keep most of their portfolio in debt securities of less than 60-day maturity. As will be seen later in this Work Book, this helps in positioning liquid schemes as the lowest in price risk among all kinds of mutual fund schemes. Therefore, these schemes are ideal for investors seeking high liquidity with safety of capital.

 Types of Equity Funds
Diversified equity fund is a category of funds that invest in a diverse mix of securities that cut across sectors.
Sector funds however invest in only a specific sector. For example, a banking sector fund will invest in only shares of banking companies. Gold sector fund will invest in only shares of gold-related companies.
Thematic funds invest in line with an investment theme. For example, an infrastructure thematic fund might invest in shares of companies that are into infrastructure construction, infrastructure toll-collection, cement, steel, telecom, power etc. The investment is thus more broad-based than a sector fund; but narrower than a diversified equity fund.
Equity Linked Savings Schemes (ELSS), as seen earlier, offer tax benefits to investors. However, the investment is subject to lock-in for a period of 3 years.
Rajiv Gandhi Equity Savings Schemes (RGESS) too, as seen earlier, offer tax benefits to first-time investors. Investments are subject to a fixed lock-in period of 1 year, and flexible lock-in period of 2 years.

Equity Income / Dividend Yield Schemes invest in securities whose shares fluctuate less, and the dividend represents a larger proportion of the returns on those shares. The NAV of such equity schemes are expected to fluctuate lesser than other categories of equity schemes.
Arbitrage Funds take opposite positions in different markets / securities, such that the risk is neutralized, but a return is earned. For instance, by buying a share in BSE, and simultaneously selling the same share in the NSE at a higher price. Most arbitrage funds take contrary positions between the equity market and the futures and options market. (‘Futures’ and ‘Options’ are commonly referred to as derivatives. These are designed to help investors to take positions or protect their risk in some other security, such as an equity share. They are traded in exchanges like the NSE and the BSE. Chapter10 provides an example of futures contract that is linked to gold).
Although these schemes invest in equity markets, the expected returns are in line with liquid funds.

Gold Funds
These funds invest in gold and gold-related securities. They can be structured in either of the following formats:
Gold Exchange Traded Fund, which is like an index fund that invests in gold, gold-related securities or gold deposit schemes of banks. The structure of exchange traded funds is discussed later in this chapter. The NAV of such funds moves in line with gold prices in the market.
Gold Sector Fund i.e. the fund will invest in shares of companies engaged in gold mining and processing. Though gold prices influence these shares, the prices of these shares are more closely linked to the profitability and gold reserves of the companies. Therefore, NAV of these funds do not closely mirror gold prices.
(Gold Sector Fund is like any equity sector fund, which was discussed under ‘Types of Equity Funds’. It is discussed here to highlight the difference from a Gold ETF. It is important to understand that unlike Gold sector fund, Gold ETF does not invest in equity shares of companies involved in Gold related businesses including gold mining.)


 Types of Hybrid Funds
Monthly Income Plan seeks to declare a dividend every month. It therefore invests largely in debt securities. However, a small percentage is invested in equity shares to improve the scheme’s yield.
As will be discussed in Unit8, the term ‘Monthly Income’ is a bit of a misnomer and investor needs to study the scheme properly, before presuming that an income will be received every month.

Another very popular category among the hybrid funds is the Balanced Fund category. These schemes were historically launched for the purpose of giving an investor exposure to both equity and debt simultaneously in one portfolio. The objective of these schemes was to provide growth and stability (or regular income), where equity had the potential to meet the former objective and debt the latter. The balanced funds can have fixed or flexible allocation between equity and debt. One can get the information about the allocation and investment style from the Scheme Information Document.
Capital Protected Schemes are close-ended schemes, which are structured to ensure that investors get their principal back, irrespective of what happens to the market. This is ideally done by investing in Zero Coupon Government Securities whose maturity is aligned to the scheme’s maturity. (Zero coupon securities are securities that do not pay a regular interest, but accumulate the interest, and pay it along with the principal when the security matures).
As detailed in the following example, the investment is structured, such that the principal amount invested in the zero-coupon security, together with the interest that accumulates during the period of the scheme would grow to the amount that the investor invested at the start.
Suppose an investor invested Rs 10,000 in a capital protected scheme of 5 years. If 5-year government securities yield 7% at that time, then an amount of Rs 7,129.86 invested in 5-year zero-coupon government securities would mature to Rs 10,000 in 5 years. Thus, by investing Rs 7,129.86 in the 5-year zero-coupon government security, the scheme ensures that it will have Rs 10,000 to repay to the investor in 5 years.
After investing in the government security, Rs 2,870.14 is left over (Rs 10,000 invested by the investor, less Rs 7129.86 invested in government securities). This amount is invested in riskier securities like equities. Even if the risky investment becomes completely worthless (a rare possibility), the investor is assured of getting back the principal invested, out of the maturity moneys received on the government security.
Some of these schemes are structured with a minor difference – the investment is made in good quality debt securities issued by companies, rather than Central Government Securities. Since any borrower other than the government can default, it would be appropriate to view these alternate structures as Capital Protection Oriented Schemes rather than Capital Protected Schemes.
It may be noted that capital protection can also be offered through a guarantee from a guarantor, who has the financial strength to offer the guarantee. Such schemes are however not prevalent in the market.
Some of these funds are also launched as Asset Allocation Funds. These schemes are not different from those under the Hybrid category. One should go through the Scheme Information Document to understand the unique characteristics of the individual scheme.