Wealth Forum

MFD - Level 2 Certification

Ethics and Investor Protection

Q1.

AMFI code of ethics has been set up for:

Distributors

AMC’s

RTA’s

Custodians

Q2.

AMFI has also framed a code of conduct for:

Individual agents

Brokers

Distribution houses

All of the above

Q3.

If there is a proved first violation by the intermediary, the registration will be cancelled and intimation will be sent to all AMCs.

True

False

Q4.

Which of the following is not true about mis-selling?

Mis-selling is defined in the act

Every instance where an investor is told something that is not true, with the intention of influencing him to buy the product would qualify as mis-selling

Convincing an investor to buy a product that is not appropriate for the person’s risk profile is a case of mis-selling

None of the above

Q5.

Investment policy, asset allocation, returns, risk etc are explained in the offer documents of schemes.

True

False

Q6.

Which of the following statements is incorrect?

SEBI has prescribed detailed guidelines on information disclosure

SEBI has made it easier for investors to access and understand the salient features of each scheme by separating the SID and SAI

Intermediaries are allowed to continue the practice of rebating

None of the above

Q7.

Who handles the day to day activities of the mutual fund?

AMC

Trustees

RTA

Custodians

Q8.

Who is responsible for exercising control over the AMC?

Investors

Trustees

RTA

Custodians

Q9.

Which entity of mutual fund keeps a tab on corporate actions such as bonus and dividend?

AMC

Trustees

RTA

Custodians

Q10.

The custodian is an entity independent of the AMC.

True

False

Q11.

Transfers of investments between schemes need to be at cost.

True

False

Q12.

Which of the following is/are regulatory step for protecting investors against fraud?

Third party payments are accepted only in exceptional cases

Dividend and redemption payments are directly credited to the investor’s default account

Redemption requests need to be signed as per the account operating instructions registered with the AMC

All of the above

Q13.

Mutual fund transactions cannot be done under a power of attorney.

True

False

Q14.

Which of the following does not form a criteria for AMCs to perform due diligence of distributors?

Multiple point presence

AUM raised over Rs. 100 crores across industry in the non-institutional category

Commission received of over Rs. 50 lakh p.a. across industry

None of the above

Q15.

How many bank accounts can an individual register with the AMC?

Q16.

Who undertakes the due diligence process of distributors?

AMC

Trustees

Custodian

SEBI

Q17.

In an advisory transaction, the customer is not required to pay the distributor anything other than a standard flat transaction charge.

True

False

Q18.

The transaction has to be classified as _____ where a distributor represents to offer advice while distributing the product; it is subject to the principle of ‘appropriateness’ of products to that customer category.

Advisory

Execution only

Appropriate execution

Either b or c

Q19.

In execution only transactions, the distributor need not communicate to the investor even if he has the information to believe that the transaction is not appropriate for the customer.

True

False

Q20.

Appropriateness is defined as selling only that product categorization that is identified as best suited for investors within a defined upper ceiling of risk appetite.

True

False

Q21.

Which of the following is not a compliance and risk management function of distributors?

Criteria to be used in the review of products should be reviewed

Review of transactions, exceptions identification, escalation and resolution process by internal audit

Review of customer onboarding and relationship management process

All of the above

Q22.

Request for change of address is to be submitted to:

AMC

Trustee