Sample Questions

NISM-Series-5B: Mutual Fund Foundation Mock Tests — 5 random MCQs with answers & explanations

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These 5 questions are randomly selected (standard MCQs only, not case-based).

Q1 What can equity share owners receive from the company, apart from long-term capital appreciation?

  • A. Rent from property.
  • B. Dividends. Correct Answer
  • C. Fixed periodic payments.
  • D. Interest income.
Explanation:
Companies may share a portion of their profits with shareholders in the form of dividends.

Marks: 1

Q2 How is the Simple Return on an investment calculated?

  • A. (End Value / Begin Value)^(1/Number of Years) - 1.
  • B. (End Value + Dividend - Begin Value) / Begin Value * 100.
  • C. (End Value - Begin Value) / Number of Years.
  • D. (End Value - Begin Value) / Begin Value * 100. Correct Answer
Explanation:
Simple Return is calculated as the percentage change in the investment's value over a period.

Marks: 1

Q3 What is Nomination in the context of mutual fund investments?

  • A. Specifying who will receive the units in the event of the unit-holder's death. Correct Answer
  • B. Appointing someone to manage the investment on your behalf.
  • C. Setting a trigger for automatic redemption.
  • D. Registering multiple bank accounts for receiving payments.
Explanation:
Nomination is a facility for single or joint unit-holders to designate a person(s) to whom the units should be transmitted upon their demise.

Marks: 1

Q4 A greater portion of returns from conventional debt investments is generally through ________. (NISM workbook)

  • A. Interest income Correct Answer
  • B. Capital gain
  • C. Dividend income
  • D. Inflation
Explanation:
Conventional debt investments like bonds typically provide regular income in the form of interest. Capital gains are less common unless bought/sold in the secondary market.

Marks: 1

Q5 Can the Sharpe Ratio of an equity scheme be compared with the Sharpe Ratio of a debt scheme?

  • A. No, comparisons should only be made between comparable schemes. Correct Answer
  • B. Yes, they are always comparable.
  • C. Only if they have the same investment objective.
  • D. Yes, as both measure risk-adjusted returns.
Explanation:
Sharpe Ratio comparisons are meaningful only between schemes with similar investment characteristics and risk profiles (i.e., comparable schemes).

Marks: 1

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