NISM Chapter 5: Scheme Related Information All Topics Questions Answers PDF

NISM Series V-A Multiple Choice Questions Answers

NISM Chapter 5: Scheme Related Information All Topics Questions Answers PDF

5.1 Mandatory Documents MCQs
1.What is the purpose of mentioning “Mutual fund investments are subject to market risk. Please read all scheme related documents before investing” in mutual fund communications?
a. To warn investors about potential losses.
b. To promote awareness of market risks.
c. To encourage investors to read scheme related documents.
d. All of the above.

2. Which of the following are considered scheme related documents in mutual fund investments?
a. Offer document and application form.
b. Scheme Information Document, Statement of Additional Information, and Key Information Memorandum.
c. Annual report and financial statements.
d. Risk disclosure statement and investor agreement.

3. What is the principle that governs mutual fund investments, stating that the investor is responsible for reading and understanding the scheme related documents?
a. Caveat venditor
b. Caveat actor
c. Caveat emptor
d. Caveat negotiator

4. Which document contains details about a particular mutual fund scheme?
a. Offer document
b. Scheme Information Document (SID)
c. Statement of Additional Information (SAI)
d. Key Information Memorandum (KIM)

5. Which document provides statutory information about the mutual fund or Asset Management Company (AMC) offering the scheme?
a. Offer document
b. Scheme Information Document (SID)
c. Statement of Additional Information (SAI)
d. Key Information Memorandum (KIM)

6. The scheme related documents help investors in making an informed investment decision by:
a. Providing legal advice on investment options.
b. Guaranteeing high returns on investments.
c. Presenting the risks and features of the scheme.
d. Assuring capital protection.

7. What is the significance of the person signing the application form in relation to the scheme related documents?
a. They become the legal owner of the mutual fund units.
b. They accept the terms and conditions mentioned in the scheme related documents.
c. They have the authority to change the scheme’s features.
d. They become eligible for tax benefits.

8. Which document contains information about the particular scheme, such as its investment objectives, asset allocation, and risk factors?
a. Offer document
b. Scheme Information Document (SID)
c. Statement of Additional Information (SAI)
d. Key Information Memorandum (KIM)

9. Which document provides additional details about the mutual fund or AMC offering the scheme, including legal and statutory information?
a. Offer document
b. Scheme Information Document (SID)
c. Statement of Additional Information (SAI)
d. Key Information Memorandum (KIM)

10. What should investors do before investing in a mutual fund scheme?
a. Read the offer document thoroughly.
b. Consult a financial advisor for personalized advice.
c. Understand the risks and features of the scheme.
d. All of the above.

11. True or False: Investors are legally obligated to read and understand the scheme related documents before investing in a mutual fund scheme.
a. True
b. False

12. What is the purpose of the Key Information Memorandum (KIM)?
a. To provide detailed information on the mutual fund’s performance history.
b. To disclose the fund manager’s investment strategy.
c. To summarize the key features of the mutual fund scheme in a concise manner.
d. To provide legal documentation for the mutual fund’s registration.

13. Who is responsible for providing the Scheme Information Document (SID) and Statement of Additional Information (SAI) to investors?
a. Asset Management Companies (AMCs)
b. Mutual fund distributors
c. Stock exchanges
d. Regulatory authorities

14. Which document among the scheme related documents contains detailed information about the mutual fund’s investment objectives, past performance, and fund manager’s track record?
a. Offer document
b. Scheme Information Document (SID)
c. Statement of Additional Information (SAI)
d. Key Information Memorandum (KIM)

15. What should an investor do if they have any doubts or queries regarding the scheme related documents?
a. Consult a financial advisor for clarification.
b. Contact the mutual fund’s customer service or investor relations department.
c. Read the documents again until all doubts are resolved.
d. Ignore the doubts and proceed with the investment.

16. Which of the following statements is true regarding the Scheme Information Document (SID) and Statement of Additional Information (SAI)?
a. SID and SAI are two separate documents that are not related.
b. SAI is a stand-alone document and is not part of the SID.
c. SAI is part of the SID, although they are presented as separate documents.
d. SID and SAI are combined into a single document.

17. Who prepares the Scheme Related Documents in the prescribed format?
a. Mutual fund distributors
b. Regulatory authorities
c. Stock exchanges
d. Mutual fund companies

18. How are the Scheme Related Documents prepared to ensure ease of understanding for investors?
a. They are written in complex financial and legal jargon.
b. They are prepared in a clear, concise, and easy-to-understand style.
c. They are only accessible to sophisticated experts of finance and law.
d. They are prepared in multiple languages for diverse investors.

19. What is the role of SEBI in the approval process of the Scheme Related Documents?
a. SEBI approves the documents before they are published.
b. SEBI disapproves the documents if they do not meet the requirements.
c. SEBI provides observations that the mutual fund must incorporate.
d. SEBI does not play a role in the approval process.

20. Where can investors view the draft SID and SAI of a mutual fund scheme?
a. On the mutual fund’s website
b. On AMFI’s website
c. On SEBI’s website
d. On the stock exchange’s website

21. When are the final Scheme Related Documents required to be hosted on AMFI’s website?
a. Before the issue opens
b. After the issue closes
c. On the day of the scheme launch
d. Anytime during the subscription period

22. What is the purpose of incorporating SEBI’s observations into the Scheme Related Documents?
a. To seek approval from SEBI
b. To ensure compliance with SEBI regulations
c. To make the documents more comprehensive
d. To simplify the language of the documents

23. Are the Scheme Related Documents “vetted” or approved by SEBI?
a. Yes, SEBI approves the documents before publication.
b. No, SEBI does not play a role in approving the documents.
c. Yes, SEBI reviews and approves the documents after publication.
d. No, the documents are reviewed by an independent committee.

24. What is the purpose of making the Scheme Related Documents available for download on mutual fund websites?
a. To comply with regulatory requirements
b. To provide transparency and accessibility to investors
c. To reduce the printing and distribution costs of the documents
d. To promote digitalization in the mutual fund industry

25. What does “caveat emptor” mean in the context of mutual fund investments?
a. Mutual fund investments are risk-free.
b. Investors should exercise caution and read the scheme related documents before investing.
c. Investors should rely solely on the advice of financial experts.
d. Mutual fund investments are guaranteed by the government.

26. What is the objective of scheme-related documents?
a. To provide detailed financial statements of the mutual fund.
b. To offer legal advice to investors.
c. To serve as the primary source of information for investors.
d. To promote the sales of mutual fund schemes.

27. What role do scheme-related documents play in the investor’s decision-making process?
a. They provide investment advice tailored to individual investors.
b. They offer guarantees for the performance of the mutual fund scheme.
c. They facilitate an informed investment decision through the provision of necessary information.
d. They ensure regulatory compliance of the mutual fund.

28. How are units of a mutual fund scheme offered to investors?
a. Through direct consultation with financial advisors.
b. Through advertisements in popular newspapers.
c. Through the scheme-related documents.
d. Through online investment platforms.

29. What action confirms the acceptance of the offer made through the scheme-related documents?
a. Signing the application form and making a payment.
b. Conducting due diligence on the mutual fund company.
c. Attending investor education seminars.
d. Reviewing the financial performance of the mutual fund scheme.

30. What relationship is established between the investor and the mutual fund through the scheme-related documents?
a. A legal partnership agreement.
b. A fiduciary duty relationship.
c. A contractual relationship.
d. A regulatory compliance relationship

Answers 5.1

1. a. To warn investors about potential losses.
2. b. Scheme Information Document, Statement of Additional Information, and Key Information Memorandum.
3. c. Caveat emptor.
4. b. Scheme Information Document (SID).
5. c. Statement of Additional Information (SAI).
6. c. Presenting the risks and features of the scheme.
7. b. They accept the terms and conditions mentioned in the scheme related documents.
8. b. Scheme Information Document (SID).
9. c. Statement of Additional Information (SAI).
10. d. All of the above.
11. a. True.
12. c. To summarize the key features of the mutual fund scheme in a concise manner.
13. a. Asset Management Companies (AMCs).
14. b. Scheme Information Document (SID).
15. b. Contact the mutual fund’s customer service or investor relations department.
16. c. SAI is part of the SID, although they are presented as separate documents.
17. d. Mutual fund companies.
18. b. They are prepared in a clear, concise, and easy-to-understand style.
19. c. SEBI provides observations that the mutual fund must incorporate.
20. c. On SEBI’s website.
21. a. Before the issue opens.
22. b. To ensure compliance with SEBI regulations.
23. b. No, SEBI does not play a role in approving the documents.
24. b. To provide transparency and accessibility to investors.
25. b. Investors should exercise caution and read the scheme related documents before investing.
26. c. To serve as the primary source of information for investors.
27. c. They facilitate an informed investment decision through the provision of necessary information.
28. c. Through the scheme-related documents.
29. a. Signing the application form and making a payment.
30. c. A contractual relationship

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