Unit ko samjho · NISM Series V-A
Structure of Mutual Funds
16 questions is unit mein
Sawaal aur jawaab English mein hain, kyunki NISM ka exam paper bhi English mein hota hai.
Is unit mein kya hai
- An Indian mutual fund is constituted in which legal form?
- Which activity most directly reflects the trustees’ oversight role in a mutual fund?
- Which activity is most directly associated with a mutual fund’s custodian?
- An Indian mutual fund’s trust deed authorises its trustee to appoint the AMC. Which arrangement is consistent with Regulation 18 of the SEBI (Mutual Funds) Regulations, 2026?
- An AMC shareholder claims that a scheme’s securities are assets belonging to the AMC because it manages them. Which statement is correct?
- Which description best identifies AMFI’s institutional role?
- An AMC has outsourced its unitholder recordkeeping. An investor’s statement shows the wrong unit balance, although the scheme’s NAV is correct. Which service provider’s records should be checked first?
- An AMC has received the approved prices of its portfolio securities. It must now combine those values with cash, accrued income, liabilities and units outstanding to calculate NAV. Which function performs this calculation?
- A proposed portfolio trade appears attractive but may breach a scheme restriction. Which response best separates the AMC’s investment and compliance responsibilities?
- Which service provider is engaged to examine a scheme’s annual financial statements and express an independent audit opinion on them?
- A debt fund needs two different inputs: an opinion on a bond issuer’s ability to meet debt obligations, and an input for valuing that bond in the portfolio. Which pairing matches these tasks?
- An investor holds mutual fund units in dematerialised form and wants to check the electronic holdings recorded in the demat account. Which intermediary normally provides the investor-facing interface to the depository?
- A subscription reconciliation shows that an application was recorded, but the corresponding bank credit is missing. The operations team needs confirmation of receipt into the scheme’s collection account, not a unit-allotment record. Which service provider is directly relevant?
- An investor’s unit balance is correct, but an intermediary needs to check the investor’s recorded KYC status. Which record source is relevant to that check rather than to the scheme’s unit register?
- An entity takes the initiative to establish a mutual fund trust. A separate AMC will manage the schemes and trustees will oversee the arrangement. Which role does the initiating entity perform?
- In an AMC’s payment workflow, one employee can change a payout bank account and release the payment without anyone else checking it. Which control most directly addresses this weakness?
Zaroori ideas
Practice bank se · 1
An Indian mutual fund is constituted in which legal form?
The trust is the fund’s legal structure. The fund is established as a trust. The presence of an asset management company does not make the fund itself a company. The fund and its manager perform different functions. Remember: Distinguish the mutual fund trust from the asset management company.
Hint Common mistake: Choosing company because the manager is called an AMC.
VA-001Practice bank se · 2
Which activity most directly reflects the trustees’ oversight role in a mutual fund?
This answer describes supervision of how the AMC fulfils its responsibilities. The question asks about oversight of the AMC, not portfolio execution or record maintenance. Review of the AMC’s conduct and obligations fits that role. Investment selection, investor records and custody are distinct functions. Remember: Associate trustees with oversight and protection of unitholder interests.
Hint Common mistake: Assuming oversight means personally executing portfolio trades.
VA-002Practice bank se · 3
Which activity is most directly associated with a mutual fund’s custodian?
Safekeeping is the central custody function. The custodian holds scheme securities in custody. Being responsible for custody does not give the custodian the fund manager’s investment-selection role or make the securities its own investments. Remember: Keep portfolio management, custody and investor records separate in role-based questions.
Hint Common mistake: Confusing the person who safeguards an asset with the person who chooses the investment.
VA-029Practice bank se · 4
An Indian mutual fund’s trust deed authorises its trustee to appoint the AMC. Which arrangement is consistent with Regulation 18 of the SEBI (Mutual Funds) Regulations, 2026?
Regulation 18 permits appointment by the trustee when the trust deed authorises it, and the AMC must have the required SEBI approval. The trust deed expressly authorises the trustee to appoint the AMC, so the conditional trustee route in Regulation 18 is available. The regulation describes appointment by the sponsor, or the trustee if the trust deed authorises it. It also requires an AMC approved by SEBI under Regulation 16(4). Consequently, the authorised trustee can make the appointment, but cannot treat the trust deed as a substitute for SEBI approval. This question tests that narrow allocation of roles. Other trustee obligations and requirements for a later change of AMC must still be checked separately. Remember: Distinguish who appoints the AMC from the regulator that approves it.
Hint Common mistake: Answering “trustee” or “sponsor” as an unconditional rule without checking the trust deed and the approval requirement.
VA-030Practice bank se · 5
An AMC shareholder claims that a scheme’s securities are assets belonging to the AMC because it manages them. Which statement is correct?
This answer correctly identifies the trust-property relationship and the beneficiaries. The scheme portfolio is not converted into the AMC’s own corporate property merely because the AMC manages it. Trustees hold the fund’s property for unitholder benefit. Similarly, a sponsor’s establishment role or a custodian’s safekeeping role is not ownership for its own benefit. Remember: Ask separately who manages, who holds in trust, who safeguards and who benefits.
Hint Common mistake: Using “legally belongs to” without distinguishing trustee holding from beneficial interest.
VA-031Practice bank se · 6
Which description best identifies AMFI’s institutional role?
This answer identifies the nature and general function of the association. The name refers to the Association of Mutual Funds in India. An industry association can support standards and development without replacing SEBI as the statutory securities regulator. Remember: Distinguish an industry association from a statutory regulator.
Hint Common mistake: Assuming that involvement in industry standards makes an association the securities regulator.
VA-032Practice bank se · 7
An AMC has outsourced its unitholder recordkeeping. An investor’s statement shows the wrong unit balance, although the scheme’s NAV is correct. Which service provider’s records should be checked first?
The RTA’s account records contain the investor’s unit movements and are the relevant starting point. The problem is the number of units recorded for one investor, not the value of each unit. Check the investor’s opening units, purchases, redemptions and other recorded unit movements with the RTA. Reconcile these entries with the accepted transaction records. A correct NAV does not by itself establish that the investor’s unit balance is correct. Remember: Identify whether the error concerns investor units, scheme assets or security prices before choosing the service provider.
Hint Common mistake: Assuming every mutual fund account problem belongs to the custodian.
VA-076Practice bank se · 8
An AMC has received the approved prices of its portfolio securities. It must now combine those values with cash, accrued income, liabilities and units outstanding to calculate NAV. Which function performs this calculation?
This function assembles the scheme’s accounting inputs and calculates NAV, including relevant accruals. The task starts after the portfolio prices have been supplied, so obtaining prices is not the remaining work. The scheme’s net assets must include the relevant balances and accruals and deduct liabilities. Fund accounting uses those net assets and the outstanding units to calculate and validate NAV. Remember: Distinguish the valuation input from the fund-accounting calculation that uses it.
Hint Common mistake: Treating the valuation agency’s security prices as a finished scheme NAV.
VA-077Practice bank se · 9
A proposed portfolio trade appears attractive but may breach a scheme restriction. Which response best separates the AMC’s investment and compliance responsibilities?
The restriction must be checked before execution. Compliance clearance and the investment decision remain distinct checks. First establish what restriction applies and whether the proposed transaction would breach it. The compliance function or approved compliance controls must address that question before the trade is treated as permissible. The investment team can then consider an allowed trade on its investment merits. Recording a breach after execution is not a substitute for checking beforehand. Remember: Check whether an investment is permitted separately from whether it appears profitable.
Hint Common mistake: Confusing a favourable return forecast with permission to disregard the scheme mandate.
VA-078Practice bank se · 10
Which service provider is engaged to examine a scheme’s annual financial statements and express an independent audit opinion on them?
The statutory auditor performs the independent financial-statement audit described in the question. The task in the stem is examination of annual financial statements for an independent audit opinion. That is the auditor’s function. The other providers supply records, valuation inputs or credit opinions that serve different purposes. An audit opinion is not a promise that the scheme will earn a particular return or that no investment loss can occur. Remember: Match the service provider to the output required: unit records, valuation inputs, credit opinion or audit opinion.
Hint Common mistake: Assuming that a provider supplying data for the accounts also issues the independent audit opinion.
VA-104Practice bank se · 11
A debt fund needs two different inputs: an opinion on a bond issuer’s ability to meet debt obligations, and an input for valuing that bond in the portfolio. Which pairing matches these tasks?
This correctly separates the credit-rating function from the valuation-input function. An opinion on meeting debt obligations concerns credit quality. The credit rating agency is the relevant specialist for that opinion. An input for assigning a portfolio value is a valuation task. The valuation agency supplies that input within its scope. A rating is not itself a rupee market price, and neither input removes the AMC’s own responsibilities. Remember: A credit rating describes credit quality within its scope, while valuation assigns an amount to a portfolio asset.
Hint Common mistake: Treating a high credit rating as either a quoted bond price or a guarantee of repayment.
VA-105Practice bank se · 12
An investor holds mutual fund units in dematerialised form and wants to check the electronic holdings recorded in the demat account. Which intermediary normally provides the investor-facing interface to the depository?
The DP connects the investor’s demat account relationship to the depository. The question concerns units recorded in the investor’s demat account, not the underlying bonds and shares owned by the scheme. The depository participant is the investor-facing intermediary for that demat relationship. This does not mean that every mutual fund holding must be dematerialised or that every service request uses the same operational route. Remember: Keep the investor’s units separate from the securities owned inside the mutual fund portfolio.
Hint Common mistake: Choosing the scheme custodian because both custody and dematerialisation involve holding securities.
VA-106Practice bank se · 13
A subscription reconciliation shows that an application was recorded, but the corresponding bank credit is missing. The operations team needs confirmation of receipt into the scheme’s collection account, not a unit-allotment record. Which service provider is directly relevant?
The collecting banker provides the banking record needed to confirm the receipt. The unresolved fact is whether money reached the collection bank account. The collecting banker’s receipt and account records address that fact. The RTA can help reconcile the application and allotment records, but that is a different record layer. Remember: Match the missing evidence to the service provider responsible for that record.
Hint Common mistake: Sending every investor-transaction mismatch to the same intermediary without identifying whether cash or units are missing.
VA-130Practice bank se · 14
An investor’s unit balance is correct, but an intermediary needs to check the investor’s recorded KYC status. Which record source is relevant to that check rather than to the scheme’s unit register?
A KRA record is relevant to checking the registered KYC status. The question concerns the investor’s KYC status rather than the number or value of units. AMFI’s KYC page directs users to a KRA for a status check. A KRA record is therefore the relevant record type. The result may still require follow-up with the intermediary. Remember: Keep identity records separate from unit ownership, valuation and remuneration records.
Hint Common mistake: Assuming that a correct unit statement proves every KYC requirement is complete.
VA-131Practice bank se · 15
An entity takes the initiative to establish a mutual fund trust. A separate AMC will manage the schemes and trustees will oversee the arrangement. Which role does the initiating entity perform?
The entity initiating establishment of the mutual fund is acting as sponsor. The distinctive activity is initiating the establishment of the mutual fund trust. That identifies the sponsor. The stem separately assigns scheme management to the AMC and oversight to trustees, so those functions should not be confused with the initiating role. Remember: Identify the sponsor by establishment of the fund, not by its day-to-day service functions.
Hint Common mistake: Assuming the entity that establishes a fund must also perform every management and oversight function.
VA-132Practice bank se · 16
In an AMC’s payment workflow, one employee can change a payout bank account and release the payment without anyone else checking it. Which control most directly addresses this weakness?
The second person or independently authorised function checks the changed destination before release. The weakness is not merely a short password. The same person can alter the destination and approve the resulting payment. An independent checker should verify the account change against the authorised instruction before use. An audit trail can support that control but does not replace the independent decision. Remember: Independent authorisation is different from giving one person two credentials.
Hint Common mistake: Treating an audit log or password change as a substitute for separation of duties.
VA-133