Unit study guide · NISM Series V-D
Fund Distribution and Channel Management Practices
4 questions in this unit
What this unit covers
- For a fictional distributor agreement, annual trail commission equals 0.60% of the average eligible assets retained for the full year. If those average assets are ₹80 lakh, what is the commission before GST or other deductions? Assumptions: Rate and base are hypothetical agreement terms. GST and deductions are excluded.
- A client asks how a distributor is paid for a recommended regular-plan investment. What is the most appropriate response?
- Which statement is most accurate when explaining the difference between mutual-fund distribution and a broader investment-advisory service?
- A digital distributor accepts client orders online. Which control most directly improves the reliability of the sales and transaction record?
Key ideas
From the practice bank · 1
For a fictional distributor agreement, annual trail commission equals 0.60% of the average eligible assets retained for the full year. If those average assets are ₹80 lakh, what is the commission before GST or other deductions? Assumptions: Rate and base are hypothetical agreement terms. GST and deductions are excluded.
Commission = ₹80,00,000 × 0.006 = ₹48,000. The agreement’s stated eligible-asset base and measurement period control the calculation. Remember: Read the commission rate together with its base and time period.
Hint Convert 0.60% to 0.006 before multiplying.
V-D-027From the practice bank · 2
A client asks how a distributor is paid for a recommended regular-plan investment. What is the most appropriate response?
The client should understand how the distributor is compensated and any relevant conflict. Clear disclosure supports an informed decision without replacing the suitability assessment. Remember: Explain both the product and the incentives surrounding its sale.
Hint Transparency concerns the economic arrangement, not just whether an invoice is issued.
V-D-028From the practice bank · 3
Which statement is most accurate when explaining the difference between mutual-fund distribution and a broader investment-advisory service?
A client should understand what service is being provided, how the intermediary is paid and what obligations apply. Appropriate product discussion within distribution should not be confused with claiming a different regulated status. Remember: Use an accurate description of the intermediary’s actual role.
Hint Do not treat different service models as interchangeable labels.
V-D-029From the practice bank · 4
A digital distributor accepts client orders online. Which control most directly improves the reliability of the sales and transaction record?
Timestamped disclosure, instruction and confirmation records create a traceable transaction history. This helps resolve errors and complaints and supports effective oversight. Remember: Digital convenience should be supported by reliable evidence and controls.
Hint A reviewer should be able to reconstruct what was shown and what was authorised.
V-D-030