MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
1. Which term refers to a record of money received and spent by a business or organization during a
particular period?
a) Income
b) Expenditure
c) Savings
d) Factors of Production
Answer: b) Expenditure
2. What is the portion of income not spent on current expenditures?
a) Income
b) Expenditure
c) Savings
d) Factors of Production
Answer: c) Savings
3. Which of the following is NOT a factor of production?
a) Land
b) Labor
c) Production
d) Entrepreneurship
Answer: c) Production
1. What does GDP stand for?
a) Gross Domestic Production
b) Gross Domestic Profit
c) Gross Domestic Product
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
d) Gross Domestic Price
Answer: c) Gross Domestic Product
2. Which concept states that a sum of money is worth more now than the same sum will be at a
future date?
a) GDP
b) Time of Value
c) Compounding
d) Discounting
Answer: b) Time of Value
3. What is compounding used for in finance?
a) Calculating present value
b) Calculating future value
c) Calculating depreciation
d) Calculating inflation rate
Answer: b) Calculating future value
4. What does CAGR stand for?
a) Compound Annual Growth Rate
b) Compound Average Growth Ratio
c) Cumulative Annual Growth Return
d) Cumulative Average Growth Rate
Answer: a) Compound Annual Growth Rate
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
5. Which of the following is an example of a direct tax?
a) Value Added Tax (VAT)
b) Sales Tax
c) Income Tax
d) Excise Duty
Answer: c) Income Tax
1. What is the primary function of a bank according to the provided information?
a) Providing insurance services
b) Offering investment advice
c) Performing deposit and lending functions
d) Managing real estate investments
Answer: c) Performing deposit and lending functions
2. According to Cairn Cross, what is the definition of a bank?
a) A financial institution dealing solely in savings accounts
b) An institution specialized in stock trading
c) A financial intermediary institution dealing in loans and advances
d) An organization focused on providing insurance policies
Answer: c) A financial intermediary institution dealing in loans and advances
3. Which of the following is NOT a need fulfilled by banks?
a) Channelization of savings
b) Promotion of tourism
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
c) Encouragement of industries
d) Development of agriculture and other neglected sectors
Answer: b) Promotion of tourism
4. What are the types of deposits typically offered by banks?
a) Checking deposits, credit deposits, investment deposits
b) Savings deposits, investment deposits, insurance deposits
c) Saving deposits, fixed deposits, current deposits, recurring deposits
d) Time deposits, demand deposits, joint deposits
Answer: c) Saving deposits, fixed deposits, current deposits, recurring deposits
5. What does PMJDY stand for?
a) Pradhan Mantri Jan-Dhan Yojana
b) Prime Minister's Development Initiative
c) Priority Management for Jan Dhan Yatra
d) Public Money Jan-Dhan Yojana
Answer: a) Pradhan Mantri Jan-Dhan Yojana
1. What role do Neo-banks play in the fintech sector?
a) They offer traditional banking services exclusively.
b) They bridge the gap between traditional banking services and evolving customer expectations in
the digital age.
c) They focus solely on providing credit card services.
d) They operate physical branches like traditional banks.
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
Answer: b) They bridge the gap between traditional banking services and evolving customer
expectations in the digital age.
2. Which type of card deducts money directly from a consumer’s checking account when used?
a) Credit card
b) Debit card
c) Prepaid card
d) ATM card
Answer: b) Debit card
3. What determines the credit limit of a credit card?
a) Annual fee paid by the cardholder
b) Number of purchases made with the card
c) Credit score and income of the cardholder
d) Length of time the cardholder has held the card
Answer: c) Credit score and income of the cardholder
4. Which system is NOT part of the Payments Systems transactions in India?
a) Cheque Truncation system (CTS)
b) Electronic Clearing Service (ECS)
c) Swift Payment System
d) Express Cheque Clearing system (ECCS)
Answer: c) Swift Payment System
5. What is one of the key functions of the Reserve Bank of India (RBI)?
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
a) Managing retail banking operations
b) Issuing credit cards to consumers
c) Custodian of foreign reserves
d) Providing loans to small businesses
Answer: c) Custodian of foreign reserves
1. What do financial statements provide at the end of a financial year?
a) Predictions of future financial performance
b) A formal record of financial transactions
c) Information on consumer spending habits
d) Analysis of market trends
Answer: b) A formal record of financial transactions
2. What is the primary use of financial statements?
a) Determining consumer preferences
b) Assessing the effectiveness of marketing strategies
c) Determining the financial position of the business
d) Forecasting future economic conditions
Answer: c) Determining the financial position of the business
3. How do financial statements assist investors?
a) By providing information on consumer behavior
b) By determining potential marketing strategies
c) By helping investors decide how much to invest and at what price per share
d) By forecasting future stock market trends
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
Answer: c) By helping investors decide how much to invest and at what price per share
4. What role do financial statements play in policy-making?
a) Setting interest rates
b) Enforcing consumer protection laws
c) Determining taxation and regulations policies
d) Controlling inflation rates
Answer: c) Determining taxation and regulations policies
5. Which financial statement helps stock traders adjust their quotes?
a) Income Statement
b) Balance Sheet
c) Cash Flow Statement
d) None of the above
Answer: d) None of the above (Key financial statement for stock traders would typically be the
Income Statement or Balance Sheet.)
1. What is the definition of a ratio in accounting?
a) The sum of two mathematical expressions
b) The multiplication of two mathematical expressions
c) The quotient of two mathematical expressions representing the relationship between
accounting figures
d) The difference between two mathematical expressions
Answer: c) The quotient of two mathematical expressions representing the relationship between
accounting figures
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
2. In accounting, a ratio expresses:
a) The sum of financial figures
b) The difference between financial figures
c) The relationship between two or more accounting figures
d) The multiplication of financial figures
Answer: c) The relationship between two or more accounting figures
3. Which term defines a financial or accounting ratio?
a) A mathematical expression of consumer preferences
b) The indication of market trends
c) The indicated quotient of two mathematical expressions representing accounting figures
d) The representation of government policies
Answer: c) The indicated quotient of two mathematical expressions representing accounting
figures
4. How is a financial ratio typically calculated?
a) By adding two financial figures together
b) By subtracting one financial figure from another
c) By dividing one financial figure by another
d) By multiplying two financial figures
Answer: c) By dividing one financial figure by another
5. What does a financial ratio indicate?
a) The absolute value of a financial figure
b) The relationship between two or more financial figures
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
c) The market demand for a product
d) The potential for future economic growth
Answer: b) The relationship between two or more financial figures
1. Which of the following is NOT a component of the accounting equation?
a) Assets
b) Liabilities
c) Expenses
d) Owner’s Equity
Answer: c) Expenses
2. What does owner’s equity represent in the accounting equation?
a) Assets owed to creditors
b) Value of assets that belong to the owner(s)
c) Money generated from normal business operations
d) Excess of revenue over expenses
Answer: b) Value of assets that belong to the owner(s)
3. What is the definition of revenue expenditure?
a) Funds used for long-term asset purchases
b) Expenditure incurred to earn revenue of the current period
c) Expenses that do not result in the reduction of profit
d) Amount spent by the business for capital improvements
Answer: b) Expenditure incurred to earn revenue of the current period
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
4. Shareholders' funds represent:
a) Liabilities owed to shareholders
b) Funds used for daily operations
c) Equity belonging to the shareholders
d) Profit generated from business activities
Answer: c) Equity belonging to the shareholders
5. What is the excess of revenue income over expenses called?
a) Loss
b) Capital Expenditure
c) Shareholders’ Funds
d) Profit
Answer: d) Profit
1. Financial planning primarily aims to:
a) Ensure a household has adequate income or resources to meet current and future expenses and
needs
b) Increase spending on luxuries
c) Encourage excessive borrowing
d) Reduce savings for the future
Answer: a) Ensure a household has adequate income or resources to meet current and future
expenses and needs
2. What is one of the key points about financial planning?
a) Encourages overspending
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
b) Focuses solely on short-term goals
c) Identifies key financial goals
d) Discourages savings
Answer: c) Identifies key financial goals
3. Financial planning works primarily through:
a) Increasing debt burden
b) Identification of unnecessary expenses
c) Identification of key goals
d) Reducing income sources
Answer: c) Identification of key goals
4. Financial planning is considered an holistic approach because it:
a) Only considers current financial position
b) Does not evaluate future needs
c) Considers existing financial position, evaluates future needs, and puts a process to fund the
needs
d) Ignores progress review
Answer: c) Considers existing financial position, evaluates future needs, and puts a process to fund
the needs
5. What is the primary source of regular income for a household mentioned in the lecture?
a) Inheritance
b) Salary, profession, or business
c) Government subsidies
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
d) Investments
Answer: b) Salary, profession, or business
1. What does the term "financial goal" refer to?
a) The current cost of an asset
b) The sum of money required in the future to meet a specific need
c) The amount of money currently available for spending
d) The value of an investment at maturity
Answer: b) The sum of money required in the future to meet a specific need
2. What is the significance of identifying financial goals?
a) It helps in increasing unnecessary spending
b) It ensures inefficient use of income
c) It assists in creating a spending and saving plan to meet current and future needs
d) It discourages savings
Answer: c) It assists in creating a spending and saving plan to meet current and future needs
3. What is the relevant factor regarding the goal value in financial planning?
a) The current cost of the goal
b) The potential earnings from the investment
c) The amount of money required at the time when the goal has to be met
d) The current value of the individual's assets
Answer: c) The amount of money required at the time when the goal has to be met
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
4. How is the time to goal or investment horizon relevant in financial planning?
a) It determines the current value of the goal
b) It helps in deciding the type of investment for funding the goal
c) It has no impact on investment decisions
d) It affects only short-term financial goals
Answer: b) It helps in deciding the type of investment for funding the goal
5. What type of investments are preferred for short-term financial goals?
a) High-risk investments with potential for higher returns
b) Low-risk investments with low returns
c) No investments are preferred for short-term goals
d) No specific preference for investment types
Answer: b) Low-risk investments with low returns
1. According to the provided definition, what is investment?
a) Spending money on current needs
b) Sacrificing present value for uncertain future value
c) Keeping money idle without any return
d) Borrowing funds for future expenses
Answer: b) Sacrificing present value for uncertain future value
2. What is one reason why people invest, as mentioned in the text?
a) Reduce taxable income
b) Increase spending on luxury items
c) Attain financial security and independence
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
d) Decrease financial knowledge
Answer: c) Attain financial security and independence
3. Which of the following is NOT listed as an investment goal?
a) Generating income
b) Preserving capital
c) Maintaining liquidity
d) Speculating for fast profits
Answer: d) Speculating for fast profits
4. How can investment goals be broken down to make them more manageable?
a) By setting only short-term goals
b) By avoiding long-term goals altogether
c) By setting short-term and long-term goals separately
d) By focusing only on speculative investments
Answer: c) By setting short-term and long-term goals separately
5. Which of the following is NOT a government scheme mentioned for investment?
a) Sukanya Samriddhi Yojana (SSY)
b) National Savings Certificate (NSC)
c) Pradhan Mantri Jan Dhan Yojana
d) Sovereign Gold Bond
Answer: a) Bank Savings
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
1. Who administers and regulates the National Pension System (NPS)?
a) Reserve Bank of India (RBI)
b) Securities and Exchange Board of India (SEBI)
c) Pension Fund Regulatory and Development Authority (PFRDA)
d) Central Recordkeeping Agency (CRA)
Answer: c) Pension Fund Regulatory and Development Authority (PFRDA)
2. What is the unique identifier generated for individual subscribers under the National Pension
System (NPS)?
a) Unique Savings Account Number (USAN)
b) Permanent Retirement Fund Identifier (PRFI)
c) Permanent Retirement Account Number (PRAN)
d) Central Recordkeeping Account (CRA)
Answer: c) Permanent Retirement Account Number (PRAN)
3. When was the Public Provident Fund (PPF) introduced in India?
a) 1960
b) 1978
c) 1985
d) 1990
Answer: b) 1978
4. What is the primary objective of the Atal Pension Yojana (APY)?
a) To create a universal social security system for all Indians
b) To provide health insurance to all Indians
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
c) To promote digital payments in rural areas
d) To provide subsidies for agricultural equipment
Answer: a) To create a universal social security system for all Indians
5. What is the main expectation of equity investors when purchasing shares of a company?
a) Guaranteed returns
b) Capital gains and/or capital dividends
c) Fixed interest payments
d) Tax deductions
Answer: b) Capital gains and/or capital dividends
1. What is the primary promise made by companies or government entities issuing debt instruments
to investors?
a) Guaranteed returns
b) Ownership stake in the company
c) Steady and regular interest payments
d) Dividend payments
Answer: c) Steady and regular interest payments
2. What is the primary function of a mutual fund?
a) Investing in individual stocks only
b) Pooling money from investors and investing in various securities
c) Providing loans to companies and government entities
d) Issuing debt instruments to investors
Answer: b) Pooling money from investors and investing in various securities
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
3. Which investment avenue is often preferred due to its high liquidity and inflation-beating capacity
in India?
a) Debt instruments
b) Mutual funds
c) Real estate
d) Gold
Answer: d) Gold
4. How are Gold ETFs different from purchasing physical gold?
a) Gold ETFs involve buying physical gold directly
b) Gold ETFs are stored in Demat format
c) Gold ETFs do not involve any hassles of storing physical gold
d) Gold ETFs are riskier than purchasing physical gold
Answer: c) Gold ETFs do not involve any hassles of storing physical gold
5. What is an alternative to directly investing in real estate?
a) Investing in individual stocks
b) Investing in gold
c) Investing in real estate funds or Real Estate Investment Trusts (REITs)
d) Investing in government bonds
Answer: c) Investing in real estate funds or Real Estate Investment Trusts (REITs)
1. What are the primary objectives of investment, as mentioned in the lecture?
a) Safety, Tax Minimization, Liquidity
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
b) Growth, Capital Gain, Tax Minimization
c) Safety, Capital Gain, Income
d) Growth, Income, Liquidity
Answer: c) Safety, Capital Gain, Income
2. Which primary investment objective focuses on preserving the initial investment and avoiding
losses?
a) Safety
b) Capital Gain
c) Income
d) Tax Minimization
Answer: a) Safety
3. Which primary investment objective aims at achieving an increase in the value of the initial
investment over time?
a) Safety
b) Capital Gain
c) Income
d) Liquidity
Answer: b) Capital Gain
4. Which primary investment objective involves generating regular income from investments?
a) Safety
b) Capital Gain
c) Income
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
d) Tax Minimization
Answer: c) Income
5. What are examples of secondary objectives of investment?
a) Safety and Capital Gain
b) Income and Liquidity
c) Tax Minimization and Liquidity
d) Growth and Income
Answer: c) Tax Minimization and Liquidity
1. What term describes the variability of return an investor receives from a stock compared to the
expected return?
a) Risk assessment
b) Risk profiling
c) Systematic risk
d) Unsystematic risk
Answer: b) Risk profiling
2. Which of the following is an example of external factors contributing to variations in return and
affecting large numbers of securities?
a) Unsystematic risk
b) Basis family information
c) Systematic risk
d) Basis financial information
Answer: c) Systematic risk
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
3. What term is used to describe the risk that can be controlled and is specific to individual securities
or companies?
a) Systematic risk
b) Unsystematic risk
c) Risk appetite
d) Risk tolerance
Answer: b) Unsystematic risk
4. What factors influence an investor's risk profile, as mentioned in the lecture?
a) Past investment performance
b) Basis family information
c) Current market conditions
d) Basis personal information
Answer: d) Basis personal information
5. What are risk profiling tools used for in investment?
a) To maximize returns
b) To minimize risk
c) To assess an investor's risk appetite
d) To predict future market movements
Answer: c) To assess an investor's risk appetite
1. What is diversification in investment?
a) Concentrating investments in a single asset
b) Spreading investments across different types of assets
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
c) Investing solely in high-risk assets
d) Avoiding investments altogether
Answer: b) Spreading investments across different types of assets
2. Which phrase best describes the concept of diversification?
a) "Put all your eggs in one basket"
b) "Spread your investments widely"
c) "Invest everything in a single asset"
d) "Avoid taking risks"
Answer: b) "Spread your investments widely"
3. What is asset allocation?
a) Investing all funds in a single asset class
b) Spreading investments across various securities within the same asset class
c) Distributing investments among different asset classes
d) Focusing solely on one type of investment
Answer: c) Distributing investments among different asset classes
4. Which of the following is NOT a type of asset allocation?
a) Strategic Asset Allocation
b) Tactical Asset Allocation
c) Dynamic Asset Allocation
d) Static Asset Allocation
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
Answer: d) Static Asset Allocation
5. What distinguishes strategic asset allocation from tactical asset allocation?
a) Strategic asset allocation involves long-term decisions, while tactical asset allocation involves
short-term adjustments.
b) Strategic asset allocation involves short-term decisions, while tactical asset allocation involves
long-term adjustments.
c) Strategic asset allocation focuses solely on equities, while tactical asset allocation focuses on
bonds.
d) Strategic asset allocation is passive, while tactical asset allocation is active.
Answer: a) Strategic asset allocation involves long-term decisions, while tactical asset allocation
involves short-term adjustments.
1. What is the definition of securities according to the Securities Contracts (Regulation) Act, 1956 in
India?
a) Tradable financial assets
b) Any form of financial instrument
c) Shares, bonds, and other marketable securities
d) All of the above
Answer: d) All of the above
2. What are shares or stocks?
a) Tradable contracts representing debt obligations
b) Units representing ownership in a company
c) Units representing loans to the government
d) Units representing ownership in a mutual fund
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
Answer: b) Units representing ownership in a company
3. What is the main characteristic of bonds or debentures?
a) They represent ownership in a company
b) They have voting rights in company decisions
c) They represent a loan agreement with pre-determined terms
d) They are traded on stock exchanges
Answer: c) They represent a loan agreement with pre-determined terms
4. What is the purpose of a mutual fund?
a) To issue shares of ownership in a company
b) To lend money to the government
c) To pool money from investors and invest in various financial instruments
d) To trade stocks and bonds on stock exchanges
Answer: c) To pool money from investors and invest in various financial instruments
5. What is the key difference between the capital market and the money market?
a) Capital market deals with short-term debt securities, while money market deals with long-term
equity securities.
b) Capital market deals with long-term debt and equity securities, while money market deals with
short-term debt securities.
c) Capital market deals with government securities, while money market deals with corporate
securities.
d) Capital market deals with individual investors, while money market deals with institutional
investors.
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
Answer: b) Capital market deals with long-term debt and equity securities, while money market
deals with short-term debt securities.
1. What is the primary role of the Primary Market?
a) To provide a platform for trading existing securities
b) To facilitate trading of securities after their initial offering
c) To enable issuers to raise funds by issuing new securities
d) To regulate the trading activities of investors
Answer: c) To enable issuers to raise funds by issuing new securities
2. Which of the following is NOT a part of the Primary Market?
a) Initial Public Offering (IPO)
b) Rights Issue
c) Secondary Offering
d) Preferential Issue
Answer: c) Secondary Offering
3. What is the primary function of the Secondary Market?
a) To provide a platform for companies to issue new securities
b) To facilitate trading of securities after their initial offering
c) To regulate the trading activities of investors
d) To supervise the functioning of stock exchanges
Answer: b) To facilitate trading of securities after their initial offering
4. What distinguishes Over-The-Counter (OTC) markets from stock exchanges?
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
a) OTC markets have a central counterparty, while stock exchanges do not.
b) OTC markets have lower counterparty settlement risk compared to stock exchanges.
c) OTC markets allow for direct dealing between counterparties and offer customized transactions.
d) OTC markets are regulated by stock exchanges.
Answer: c) OTC markets allow for direct dealing between counterparties and offer customized
transactions.
5. Which regulatory authority oversees the functioning of stock exchanges in India?
a) Securities and Exchange Commission (SEC)
b) Reserve Bank of India (RBI)
c) National Stock Exchange (NSE)
d) Securities and Exchange Board of India (SEBI)
Answer: d) Securities and Exchange Board of India (SEBI)
1. What is the primary focus of fundamental analysis?
a) Analyzing price movements in the market
b) Assessing the intrinsic value of a stock
c) Predicting short-term fluctuations in stock prices
d) Identifying trends in economic indicators
Answer: b) Assessing the intrinsic value of a stock
2. Which of the following is NOT a component of fundamental analysis?
a) Economic analysis
b) Industry analysis
c) Technical analysis
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
d) Company analysis
Answer: c) Technical analysis
3. What does the fundamental approach in technical analysis primarily analyze?
a) Economic indicators and trends
b) Price movements and historical data
c) Company management and leadership
d) Publicly known information about the company
Answer: b) Price movements and historical data
4. According to the assumption of technical analysis, what is the significance of market trends?
a) Market trends do not impact stock prices
b) Stock prices follow specific trends over time
c) Market participants react randomly to market stimuli
d) Price movements in the market are unrelated to historical trends
Answer: b) Stock prices follow specific trends over time
5. What is the underlying assumption of the market discounting everything in technical analysis?
a) Stock prices reflect only fundamental factors
b) Stock prices reflect all available information
c) Historical trends do not impact stock prices
d) Market participants react inconsistently to market stimuli
Answer: b) Stock prices reflect all available information
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
1. How is risk defined in investment decisions?
a) The possibility of earning higher returns than expected
b) Exposure to danger or hazard in financial activities
c) The certainty of achieving the desired returns
d) The difference between actual and expected returns
Answer: d) The difference between actual and expected returns
2. Which of the following is an example of investment risk?
a) Earning higher returns than anticipated
b) Experiencing fluctuations in market conditions
c) Achieving consistent returns over time
d) Following a well-diversified investment strategy
Answer: b) Experiencing fluctuations in market conditions
3. What does the term "risk-free rate of return" refer to?
a) The maximum rate of return achievable in the market
b) The rate of return guaranteed by government securities
c) The expected return from high-risk investments
d) The variability in returns due to market fluctuations
Answer: b) The rate of return guaranteed by government securities
4. Which type of risk is associated with the uncertainty of future interest rate movements?
a) Default risk
b) Liquidity risk
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
c) Interest rate risk
d) Market risk
Answer: c) Interest rate risk
5. What type of risk is linked to the erosion of purchasing power due to rising prices?
a) Default risk
b) Business risk
c) Inflation risk
d) Exchange risk
Answer: c) Inflation risk
1. What is the main advantage of mutual funds in terms of investment?
a) Lack of control and choice
b) Low liquidity
c) Diversification
d) High cost inefficiency
Answer: c) Diversification
2. Which participant in the mutual funds industry is responsible for professionally managing the
portfolio of investments?
a) Trustee
b) Custodian
c) Fund Manager
d) Registrar
Answer: c) Fund Manager
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
3. What is one of the disadvantages of mutual funds related to investor control?
a) High liquidity
b) Lack of cost control
c) Professional portfolio management
d) Tax benefits
Answer: b) Lack of cost control
4. Which participant in the mutual funds industry is responsible for ensuring compliance with
regulations and protecting the interests of investors?
a) Asset Management Company
b) Trustee
c) Custodian
d) Registrar
Answer: b) Trustee
5. What advantage do mutual funds offer in terms of risk management?
a) Lack of cost control
b) Exit load
c) Choice overload
d) Perfect for various risk profiles
Answer: d) Perfect for various risk profiles
1. In which year was India's first mutual fund, Unit Trust of India (UTI), established?
a) 1947
b) 1955
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
c) 1963
d) 1971
Answer: c) 1963
2. During which phase did India witness the entry of public sector mutual funds?
a) First phase
b) Second phase
c) Third phase
d) Fourth phase
Answer: b) Second phase - 1987-1993
3. Which phase marked the entry of private sector mutual funds in India?
a) First phase
b) Second phase
c) Third phase
d) Fourth phase
Answer: c) Third phase - 1993-2003
4. When did the current phase of the mutual funds industry in India begin?
a) February 2003
b) April 2014
c) May 2014
d) January 2000
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
Answer: c) Since May 2014
5. Which of the following is NOT a major mutual fund house in India?
a) Motilal Oswal AMC
b) Kotak Mutual Fund
c) State Bank of India (SBI) Mutual Fund
d) Axis Mutual Fund
Answer: d) Axis Mutual Fund
**Multiple Choice Question:**
Which classification of mutual fund schemes is based on organization structure?
a) Active Funds and Passive Funds
b) Open-ended, Close-ended, and Interval schemes
c) Growth Funds and Income Funds
d) Equity Funds and Debt Funds
**Answer:**
b) Open-ended, Close-ended, and Interval schemes
**Multiple Choice Question:**
Which classification of mutual fund schemes is based on investment objectives?
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
a) Growth Funds, Income Funds, and Liquid/Overnight/Money Market Mutual Funds
b) Active Funds and Passive Funds
c) Open-ended, Close-ended, and Interval schemes
d) Equity Funds and Debt Funds
**Answer:**
a) Growth Funds, Income Funds, and Liquid/Overnight/Money Market Mutual Funds
**Multiple Choice Questions:**
1. What is the primary advantage offered by Money Market Funds?
a) High returns on investment
b) Long-term capital growth
c) Easy liquidity, capital preservation, and moderate income
d) Speculative trading opportunities
**Answer:** c) Easy liquidity, capital preservation, and moderate income
2. How are mutual fund products classified based on their underlying portfolio composition?
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
a) Based on the fund manager's experience
b) Based on the geographical location of investments
c) Based on the investment objectives of the scheme
d) Based on the fund's expense ratio
**Answer:** c) Based on the investment objectives of the scheme
3. What distinguishes Exchange-Traded Funds (ETFs) from traditional mutual funds?
a) ETFs are actively managed investment vehicles
b) ETFs have lower liquidity compared to mutual funds
c) ETFs are traded on stock exchanges like stocks
d) ETFs invest primarily in long-term bonds
**Answer:** c) ETFs are traded on stock exchanges like stocks
4. What is the primary characteristic of a Fund of Funds (FOF)?
a) FOFs invest directly in individual stocks and bonds
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
b) FOFs have a single portfolio managed by a single fund manager
c) FOFs invest in other types of funds, rather than individual securities
d) FOFs primarily invest in real estate properties
**Answer:** c) FOFs invest in other types of funds, rather than individual securities
5. What does NAV stand for in the context of mutual funds?
a) Net Average Value
b) Non-Asset Variation
c) Net Asset Value
d) New Allocation Volume
**Answer:** c) Net Asset Value
**Multiple Choice Question:**
Which method of calculating returns from mutual fund investments measures the simple
increase or decrease in investment in terms of percentage without considering the time
taken?
a) Compound Annual Growth Rate (CAGR)
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
b) Relative Return
c) Absolute returns
d) Relative Growth Rate (RGR)
**Answer:**
c) Absolute returns
---
**Multiple Choice Question:**
What does CAGR stand for in the context of calculating returns from mutual fund
investments?
a) Compound Average Growth Ratio
b) Compounded Annual Growth Rate
c) Cumulative Annualized Growth Rate
d) Combined Annual Growth Ratio
**Answer:**
b) Compounded Annual Growth Rate
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
---
**Multiple Choice Question:**
Why is relative return important in the context of mutual fund investments?
a) It measures the simple increase or decrease in investment in terms of percentage.
b) It calculates the growth rate of an investment as if it had grown at a steady rate,
compounded annually.
c) It is a way to gauge a fund manager's performance against the market return.
d) It measures the rate of return over an investment period without considering the time
taken.
**Answer:**
b) It is a way to gauge a fund manager's performance against the market return.
**Multiple Choice Question:**
What is the first step in the process of financial planning as described in the text?
a) Gathering client data, including goals
b) Developing and presenting financial planning recommendations
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
c) Establishing and defining the client-planner relationship
d) Monitoring the financial planning recommendations
**Answer:**
c) Establishing and defining the client-planner relationship
---
**Multiple Choice Question:**
Which step in the financial planning process involves understanding the client's personal and
financial objectives, needs, and priorities?
a) Implementing the financial planning recommendations
b) Monitoring the financial planning recommendations
c) Developing and presenting financial planning recommendations
d) Gathering client data, including goals
**Answer:**
d) Gathering client data, including goals
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
---
**Multiple Choice Question:**
According to SEBI (Investment Advisers) Regulations, 2013, what is expected of financial planners
regarding engagement terms with clients?
a) Providing free financial advice
b) Disclosing information about themselves
c) Charging excessive fees
d) Not disclosing any information about themselves
**Answer:**
b) Disclosing information about themselves
---
**Multiple Choice Question:**
In the financial planning process, what does the financial planning professional do after analyzing
and evaluating the client's financial status?
a) Establishes and defines the client-planner relationship
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
b) Gathers client data, including goals
c) Develops and presents financial planning recommendations
d) Monitors the financial planning recommendations
**Answer:**
c) Develops and presents financial planning recommendations
---
**Multiple Choice Question:**
What does life-cycle finance primarily focus on?
a) Short-term financial goals
b) Managing market risk over time
c) Investing in derivatives
d) Maximizing end-of-period wealth
**Answer:**
b) Managing market risk over time
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
---
**Multiple Choice Question:**
According to modern financial science, what is emphasized as crucial in optimal portfolio selection
at each stage of the life cycle?
a) End-of-period wealth
b) Multi-period hedging
c) Transaction costs
d) Labour earnings value and riskiness
**Answer:**
d) Labour earnings value and riskiness
---
**Multiple Choice Question:**
What is highlighted as an important consideration for financial intermediaries in managing
dynamic asset allocation?
a) Time diversification
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
b) Consumption of goods and leisure
c) Transaction costs and agency problems
d) Retail customer preferences
**Answer:**
c) Transaction costs and agency problems
---
**Multiple Choice Question:**
In the Ten Financial Stages of Life, what are the first two stages?
a) Toddler & Childhood
b) Teenage Years
c) Young Adult & Early Career
d) Mid-Career & Peak Earning Years
**Answer:**
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
a) Toddler & Childhood
**Multiple Choice Question:**
Which life stage in the Ten Financial Stages of Life typically involves establishing a strong financial
base by managing debt, establishing emergency funds, and securing insurance?
a) Life Stage #4: Building the Foundation
b) Life Stage #6: Rapid Accumulation
c) Life Stage #8: Conservation
d) Life Stage #9: Distribution
**Answer:**
a) Life Stage #4: Building the Foundation
---
**Multiple Choice Question:**
During which life stage do individuals typically focus on aggressively saving and investing to build
wealth rapidly?
a) Life Stage #5: Early Accumulation
b) Life Stage #7: Financial Independence
MCQ FINANCIAL EDUCATION AND INVESTMENT AWARENESS LECTURE 1-30.
c) Life Stage #8: Conservation
d) Life Stage #10
**Answer:**
a) Life Stage #5: Early Accumulation
---
**Multiple Choice Question:**
Which financial tool is recommended for controlling spending, tracking expenses, and planning for
saving/investing uncommitted income?
a) Retirement plan
b) Emergency fund
c) Insurance policy
d) Personal budget
**Answer:**
d) Personal budget