Mutual Funds: A Beginner's Module (Foundation) Practice Exam

Mutual Funds: A Beginner's Module (Foundation) Practice Exam

The National Stock Exchange of India (NSE) offers a foundation-level certification program called Mutual Funds: A Beginner's Module. This exam equips you with the essential knowledge and understanding of mutual funds, a popular investment vehicle in India.

Who Should Take This Exam?

This NCFM certification is ideal for:

• New Investors: Gaining a solid foundation in mutual funds before investing your hard-earned money.
• Financial Professionals: Individuals aspiring to careers in financial services, wealth management, or the mutual fund industry.
• Anyone Seeking Financial Literacy: Enhancing your understanding of how mutual funds work and their role in financial planning.

There are no formal prerequisites for taking this exam.

Roles and Responsibilities 

• Mutual Fund Distributor: An intermediary who sells mutual fund units to investors.
• Financial Advisor: Guiding clients on investment decisions, including mutual funds.
• Wealth Management Professional: Providing comprehensive financial planning services that may include incorporating mutual funds.
• Customer Service Representative (Mutual Funds): Addressing investor queries and concerns related to their mutual fund investments.

These roles typically require additional qualifications and experience beyond the NCFM certification.

Exam Details

• Duration: 120 minutes
• No. of questions: 60
• Maximum marks: 100, Passing marks: 50 (50%); There is no negative marking in this module.
• Certificate validity: For successful candidates, certificates are valid for 5 years from the test date.

Course Outline

The exam covers the following topics:

1. Mutual Funds

• Concept and structure of mutual funds in India; Role of custodian; Registrar and transfer agent; AMC; New fund offer's & procedure for investing in NFO; Investors rights and obligations.

2. Mutual Fund Products and Features

• Concept of open ended and close ended fund; Types of funds - equity, index, diversified large cap funds, midcap fund, sec or fund and other equity schemes; Concept of entry and exit load Expense ratio; Portfolio turnover; AUM; Analysis of cash level in portfolio.

3. Gold ETF’s

• Introduction of exchange traded funds, Market making by authorized Participants; Creation Units; Portfolio deposits and cash Component.

4. Debt Funds

• Salient features of debt fund; Concept of interest rate and credit risk; Pricing of debt instrument.

5. Liquid Funds

• Salient features of liquid fund; Floating rate scheme and portfolio churning in liquid funds.

6. Taxation

• Taxation of capital gains; Indexation benefit and FMP.

7. Regulation

• Role and objectives of AMFI; Different types of plans; Systematic Investment Plan (SIP); Systematic Transfer Plan (STP) and Systematic Withdrawal Plan (SWP); Dividend payout.