BOB Wealth Executive Important Questions (Professional Knowledge)
Maximize your chances of clearing the exam with this comprehensive guide on Bank of Baroda BOB Wealth Executive important questions for 2026 exam.
If you want to clear the Bank of Baroda Wealth Management exam, you need to score really well in the Professional Knowledge section. This is the most important part of the exam and directly decides your final selection.
In this post, we have put together all the BOB Wealth Executive important questions that you actually need to study for the Professional Knowledge paper. We have covered only the main financial topics like mutual funds, insurance, portfolio management, and SEBI rules. Practice these questions to check your preparation, fix your weak areas, and boost your confidence before the exam.
Module 01
4 of 4 MCQs
FINANCIAL SYSTEM & REGULATORS
4 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Which regulatory body oversees the banking sector, money markets, and formulates the monetary policy in India?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The Reserve Bank of India (RBI) is the regulatory authority for the banking sector, money markets, and the country's monetary policy.
Structural Breakdown
The Indian financial system is divided among specialised regulators: the RBI governs banking and money markets; SEBI regulates capital markets, stock exchanges, and mutual funds; IRDAI oversees the entire life and general insurance industry; and PFRDA is responsible for the pension sector, including the National Pension System (NPS).
Causal Reasoning
These separate bodies are established to effectively manage specific sectors and protect the interests of investors and consumers within those domains.
Question 2:
Which authority is primarily responsible for regulating capital markets, stock exchanges, and mutual funds in India?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
The Securities and Exchange Board of India (SEBI) is the regulatory authority for capital markets, stock exchanges, and mutual funds.
Concept Definition
SEBI is the statutory body mandated to govern the securities market in India.
Causal Reasoning
SEBI's primary objective is to protect the interests of investors in securities and to promote the development of the capital market ecosystem.
Question 3:
Which regulatory authority oversees the entire life and general insurance industry in India?
Reveal AnswerHide Answer
Correct Answer: D
Direct Answer
The Insurance Regulatory and Development Authority of India (IRDAI) oversees and regulates the entire insurance industry, encompassing both life and general insurance.
Structural Breakdown
In the Indian financial framework, regulators have distinct jurisdictions. RBI manages banking, SEBI governs capital markets, PFRDA handles pensions, and IRDAI regulates insurance.
Question 4:
The National Pension System (NPS) falls under the regulatory jurisdiction of which statutory authority?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The Pension Fund Regulatory and Development Authority (PFRDA) is responsible for regulating the pension sector, including the National Pension System (NPS).
Module 02
5 of 13 MCQs
SECURITIES MARKET INFRASTRUCTURE & SECONDARY MARKET
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
In the Indian stock market ecosystem, what is the primary function of a Depository Participant (DP)?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Depository Participants (DPs) serve as agents of depositories and interact directly with investors to hold their securities in dematerialised form.
Structural Breakdown
The market relies on multiple intermediaries performing specific roles: DPs hold digital securities; stock brokers facilitate the buying and selling of securities; Asset Management Companies (AMCs) pool and invest funds; and Clearing Corporations guarantee the settlement of trades executed on the exchanges.
Causal Reasoning
DPs act as the crucial link because retail investors cannot interact directly with central depositories like NSDL and CDSL to open demat accounts.
Question 2:
In the Indian stock market ecosystem, what is the specific role of a stock broker?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
Stock brokers act as registered intermediaries between investors and stock exchanges to facilitate the buying and selling of securities.
Concept Definition
A stock broker is the designated market participant that connects retail and institutional investors to the trading floor of the exchange.
Structural Breakdown
While stock brokers execute the trades, other intermediaries handle the rest of the lifecycle: Depository Participants (DPs) hold the securities in demat form, and Clearing Corporations manage the settlement risk.
Question 3:
Which financial intermediary is specifically responsible for guaranteeing the settlement of trades executed on stock exchanges and managing counterparty settlement risk?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Clearing Corporations guarantee the settlement of trades executed on stock exchanges and manage counterparty settlement risk.
Structural Breakdown
The Clearing Corporation stands between buyers and sellers after a trade is executed by a broker. It ensures that the 'Pay-in' (receiving funds/securities from brokers) and 'Pay-out' (delivering funds/securities to brokers) processes occur smoothly without default.
Question 4:
Which two primary depositories currently operate in the Indian capital market to hold securities in electronic form?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) are the two depositories operating in India.
Concept Definition
A depository is an institution that holds investors' securities in electronic (dematerialised) form, functioning much like a bank for shares.
Structural Breakdown
Investors cannot interact directly with NSDL or CDSL; they must open a demat account through a Depository Participant (DP), who acts as an agent connecting the investor to the central depository.
Question 5:
In the context of capital market intermediaries and depositories, what does the term "dematerialisation" specifically refer to?
Reveal AnswerHide Answer
Correct Answer: D
Direct Answer
Dematerialisation refers to the conversion of physical share certificates into an electronic format.
Concept Definition
It is the operational process that allows investors to hold and trade securities digitally rather than managing vulnerable paper certificates.
Structural Breakdown
Once dematerialised, the securities are held in a "demat" account managed by a Depository Participant (DP) on behalf of central depositories like NSDL or CDSL.
You’ve completed 5 of 13 SECURITIES MARKET INFRASTRUCTURE & SECONDARY MARKET MCQs
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Module 03
5 of 24 MCQs
MONEY MARKET & FIXED INCOME
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Consider the following statements regarding money market instruments in India:
1) Treasury Bills (T-Bills) are short-term instruments issued by the Government of India for tenors of exactly 91 days, 182 days, and 364 days.
2) Commercial Paper (CP) is a secured short-term debt instrument issued exclusively by the Reserve Bank of India to maintain banking reserves.
3) Certificates of Deposit (CDs) are negotiable money market instruments issued by scheduled commercial banks and select financial institutions.
Which of the above statements is/are correct?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Statements 1 and 3 are correct. Statement 2 is incorrect because Commercial Paper is an unsecured instrument issued by highly rated corporate entities, not the RBI.
Structural Breakdown
The money market includes various instruments tailored to different issuers: the government issues T-Bills for 91, 182, or 364 days; highly rated corporates issue unsecured Commercial Paper for working capital; banks issue Certificates of Deposit; and banks utilize "Call Money" for overnight borrowing to maintain mandatory reserve requirements like the CRR.
Causal Reasoning
Corporates use CP to meet short-term working capital requirements, while banks use overnight Call Money specifically to manage their immediate regulatory reserve obligations.
Question 2:
An investor purchases a 91-day Treasury Bill (T-Bill). According to the standard issuance mechanism, how does the investor earn a return on this specific instrument?
Reveal AnswerHide Answer
Correct Answer: D
Direct Answer
T-Bills are issued at a discount to their face value and redeemed at par upon maturity, with the difference representing the investor's return.
Concept Definition
Treasury Bills are short-term money market instruments issued by the Government of India for specific tenors of 91 days, 182 days, and 364 days, rather than paying periodic coupon interest like long-term bonds.
Question 3:
A highly rated manufacturing corporation needs to meet its short-term working capital requirements by issuing an unsecured debt instrument. Simultaneously, a scheduled commercial bank wants to issue a negotiable money market instrument to raise funds. Which respective instruments are they eligible to issue based on their entity types?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The highly rated corporate entity is eligible to issue Commercial Paper (CP), while the scheduled commercial bank is eligible to issue Certificates of Deposit (CDs).
Concept Definition
Commercial Paper is an unsecured short-term debt instrument for corporates to manage working capital. Certificates of Deposit are negotiable money market instruments strictly issued by scheduled commercial banks and select financial institutions.
Causal Reasoning
The regulatory framework dictates which entity can issue which money market instrument to ensure systemic stability and proper matching of credit risk profiles.
Question 4:
In the Indian money market, what is the primary purpose of the "call money" segment?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Call money refers to the overnight borrowing and lending of funds between banks to maintain mandatory reserve requirements like the Cash Reserve Ratio (CRR).
Concept Definition
It is a strictly short-term, bank-to-bank mechanism designed purely for regulatory liquidity management rather than long-term capital raising.
Structural Breakdown
Other money market instruments serve different issuers: T-Bills serve the government, Commercial Paper serves corporates, and Certificates of Deposit are issued by scheduled commercial banks for broader funding.
Question 5:
Consider the following statements regarding capital and money market instruments:
1) Certificates of Deposit (CDs) are negotiable instruments issued by scheduled commercial banks.
2) Corporate bonds carry a higher credit risk compared to government bonds.
3) Treasury Bills (T-Bills) are long-term instruments issued for tenors exceeding five years.
Which of the statements is/are correct?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Statements 1 and 2 are correct. Statement 3 is incorrect because T-Bills are short-term money market instruments issued for tenors of exactly 91 days, 182 days, and 364 days.
Structural Breakdown
CDs are issued by commercial banks and select FIs; corporate bonds carry higher risk than sovereign-backed government bonds; and T-Bills are strictly short-term instruments issued at a discount to face value.
You’ve completed 5 of 24 MONEY MARKET & FIXED INCOME MCQs
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Module 05
5 of 32 MCQs
MUTUAL FUNDS — STRUCTURE, SCHEMES, OPERATIONS & DISTRIBUTION
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Which financial intermediary is specifically structured to pool funds from both retail and institutional investors to invest in a diversified portfolio of securities?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Asset Management Companies (AMCs) pool funds from retail and institutional investors to invest in a diversified portfolio under a mutual fund structure.
Concept Definition
An AMC is the operational entity that makes investment decisions and manages the mutual fund's assets across various asset classes.
Question 2:
Which three entities form the primary three-tier structure of a mutual fund in India under Securities and Exchange Board of India (SEBI) regulations?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
The mutual fund structure in India is a three-tier setup comprising the Sponsor, Public Trust (Trustees), and Asset Management Company (AMC).
Concept Definition
Trustees hold the mutual fund property in trust for the benefit of the unitholders and ensure AMC compliance with SEBI regulations. The AMC handles the day-to-day operations and investment decisions of the mutual fund.
Question 3:
Under Route 1 of the SEBI (Mutual Funds) Regulations, what are the primary mandatory financial requirements for an entity to act as a mutual fund sponsor?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Under Route 1, the Sponsor must contribute at least 40% of the AMC's net worth, have a 5-year track record in financial services, maintain a positive net worth in all 5 preceding years, and have a net profit in each of those 5 years with an average annual profit of at least ₹10 crore.
Concept Definition
The sponsor acts as the promoter of the mutual fund. The strict financial criteria ensure the sponsor has adequate financial strength and a proven track record to support the Asset Management Company (AMC) and protect investor interests.
Question 4:
Which governance rule strictly applies to the appointment of auditors for mutual fund schemes in India?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
The auditor for the mutual fund schemes must be independent and cannot be the same as the auditor appointed for the Asset Management Company (AMC).
Question 5:
How does the Securities and Exchange Board of India (SEBI) strictly define a "Mid Cap" company for the purpose of mutual fund asset allocation?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
SEBI defines 'Mid Cap' companies strictly as the 101st to 250th company in terms of full market capitalisation.
Structural Breakdown
For complete categorisation, Large Cap companies are the 1st to 100th, Mid Cap companies are the 101st to 250th, and Small Cap companies are the 251st company onwards in terms of full market capitalisation.
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Module 06
5 of 12 MCQs
SPECIALIZED INVESTMENT FUNDS (SIF)
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Why was the Specialized Investment Fund (SIF) framework introduced in India's investment-management landscape?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The Specialized Investment Fund framework was introduced to bridge the gap between Mutual Funds and Portfolio Management Services (PMS) in terms of portfolio flexibility.
Structural Breakdown
The regulatory framework becomes progressively more flexible as one moves from conventional Mutual Funds toward products such as SIF, PMS and AIF. SIF allows sophisticated investment strategies while remaining within the mutual fund regulatory framework.
Causal Reasoning
SEBI identified a product gap where investors sought greater portfolio flexibility than traditional mutual funds without necessarily moving directly to PMS.
Question 2:
A mutual fund wants to establish a Specialized Investment Fund under the "Sound Track Record" route. Which combination satisfies the key operating-history and AUM requirements?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Under the Sound Track Record route, the mutual fund must have been in operation for at least 3 years and must have maintained an average AUM of not less than ₹10,000 crore during the immediately preceding 3 years.
Structural Breakdown
The route also requires that no action should have been initiated or taken against the sponsor or AMC under Sections 11, 11B and/or 24 of the SEBI Act during the last 3 years.
Exam Trap
The requirement is based on average AUM during the immediately preceding 3 years, not merely the AUM on the date of application.
Question 3:
Under the alternate eligibility route for establishing a Specialized Investment Fund, which staffing combination is required?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Under the alternate route, the AMC must appoint a CIO for the SIF with at least 10 years of fund-management experience and average AUM managed of not less than ₹5,000 crore, along with an additional Fund Manager having at least 3 years of fund-management experience and average AUM managed of not less than ₹500 crore.
Causal Reasoning
This route allows an AMC that may not satisfy the Sound Track Record route to demonstrate specialised investment capability through experienced investment professionals.
Question 4:
Which branding requirement applies to a Specialized Investment Fund established by an Asset Management Company?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
An SIF must have a distinct brand name and distinct logo separate from the AMC's regular mutual fund business.
Structural Breakdown
The AMC must also maintain a separate website or dedicated webpage for the SIF. For initial brand recognition, the sponsor's or mutual fund's brand name may be used in prescribed ways, such as 'brought to you by' or 'offered by', subject to the regulatory conditions.
Causal Reasoning
Separate branding helps investors distinguish the more sophisticated SIF product from conventional mutual fund schemes.
Question 5:
What is the general minimum aggregate investment threshold for an investor across all investment strategies offered by the same Specialized Investment Fund at the PAN level?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
The general minimum aggregate investment threshold is ₹10 lakh across all investment strategies offered by the same SIF at the PAN level.
Structural Breakdown
The ₹10 lakh threshold applies exclusively to investments under the SIF. Investments held in regular mutual fund schemes of the same AMC are not counted toward this threshold.
Exception: The statutory minimum investment requirement does not apply to an accredited investor.
You’ve completed 5 of 12 SPECIALIZED INVESTMENT FUNDS (SIF) MCQs
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Module 07
5 of 16 MCQs
DERIVATIVES, GOLD & COMMODITY EXPOSURE
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Which statement best distinguishes a forward contract from an exchange-traded futures contract?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
A forward contract is generally a customised over-the-counter agreement, whereas a futures contract is standardised and traded on an organised exchange.
Structural Breakdown
Futures typically have standardised contract specifications such as contract size and expiry. Exchange-based clearing and margin mechanisms also reduce counterparty risk compared with a privately negotiated forward.
Exam Trap
Customisation is a strength of forwards, while standardisation and exchange-based risk management are major characteristics of futures.
Question 2:
An investor takes a long futures position at ₹1,250. At expiry, the settlement price is ₹1,330. Ignoring transaction costs, what is the profit per unit?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The investor earns a profit of ₹80 per unit.
Calculation: Profit on Long Futures = Settlement Price − Futures Purchase Price = ₹1,330 − ₹1,250 = ₹80 per unit.
Concept Definition
A long futures position benefits when the settlement price rises above the contracted futures price.
Question 3:
From the perspective of the option buyer, which statement correctly distinguishes a call option from a put option?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
A call option gives its buyer the right, but not the obligation, to buy the underlying asset at the strike price, whereas a put option gives the right, but not the obligation, to sell it at the strike price.
Structural Breakdown
The option buyer pays a premium for this right. The option writer receives the premium and assumes the corresponding contractual obligation if the option is exercised.
Quick Recall: Call = Right to Buy. Put = Right to Sell.
Question 4:
What is generally the maximum possible loss for the buyer of a plain-vanilla option?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
The maximum possible loss for an option buyer is generally limited to the premium paid.
Causal Reasoning
The buyer possesses a right rather than an obligation. If exercising the option is economically unfavourable, the buyer can allow it to expire.
Risk Contrast: The payoff profile of the option writer is different because the writer accepts an obligation in exchange for receiving the option premium.
Question 5:
A share is trading at ₹720. A call option on the share has a strike price of ₹680. How is the call option classified based on moneyness?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
The call option is in-the-money because the market price of ₹720 is above the strike price of ₹680.
Concept Definition
A call option is in-the-money when Spot Price > Strike Price. It is out-of-the-money when Spot Price < Strike Price.
Application: Here, the option provides the right to buy at ₹680 when the underlying share is trading at ₹720.
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Module 08
5 of 28 MCQs
INSURANCE & RISK PROTECTION
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Which statement best describes the fundamental difference between an endowment life insurance policy and a pure term insurance policy?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
An endowment policy splits the premium into a life cover component and a savings component, whereas term insurance offers pure life cover without any savings element.
Concept Definition
Term insurance provides pure life cover (mortality risk) where the sum assured is paid to the nominee only if the policyholder passes away during the active policy term.
Structural Breakdown
| Feature | Term Insurance | Endowment Policy |
|---|---|---|
| Premium | Lower, funds mortality risk only | Higher, split between mortality and savings |
| Maturity Benefit | None | Guaranteed lump sum on survival |
| Surrender Value | None | Acquired over time |
Causal Reasoning
Term insurance premiums are significantly lower than other life insurance products because the premium goes entirely toward mortality risk without building cash value.
Question 2:
After settling a marine insurance claim, the insurer acquires the legal right to pursue recovery from any liable third party responsible for the loss. Which principle of marine insurance does this represent?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
This represents the Principle of Subrogation, which allows the insurer to pursue recovery from liable third parties after settling the claim.
Concept Definition
The Principle of Subrogation is a procedure that transfers the recovery rights from the insured to the marine insurer once the claim is paid.
Structural Breakdown
Other key principles include Utmost Good Faith (requiring voluntary disclosure of all material facts) and Indemnity (ensuring the insured cannot make a profit from the claim event).
Question 3:
If a business insures the exact same marine risk with multiple insurers, how is the claim settled if a loss occurs?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Under the Principle of Contribution, the loss is shared proportionately among the multiple insurers.
Concept Definition
The Principle of Contribution is an aggregation rule that prevents the insured from claiming the full loss amount from all insurers simultaneously when a marine risk has overlapping coverage.
Structural Breakdown
By contrast, if a single loss is caused by multiple factors, the Principle of Proximate Cause applies, meaning the insurer is liable only if the nearest, most direct cause (causa proxima) is an insured peril.
Question 4:
How is the Goods and Services Tax (GST) applied to a Unit Linked Insurance Plan (ULIP) purchased by an individual?
Reveal AnswerHide Answer
Correct Answer: D
Direct Answer
Following the 56th GST Council meeting, individual ULIP premiums are completely exempt from GST (0 percent or Nil-rated) effective September 22, 2025.
Concept Definition
A Unit Linked Insurance Plan (ULIP) combines life insurance with market-linked investment.
Historical Context: Previously, an 18 percent GST was levied on the charges deducted under a ULIP (such as mortality, premium allocation, and fund management charges), while the investment component was exempt. This framework was completely replaced when the GST Council slashed the GST on all individual life insurance premiums to zero.
Question 5:
Which combination of features accurately characterizes a standard whole life insurance policy?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Whole life insurance provides continuous life cover for the policyholder's entire lifetime and builds a cash value over time.
Concept Definition
Continuous life cover typically extends up to age 99 or 100. Unlike pure term insurance, the policyholder can borrow against or partially withdraw the accumulated cash value during their lifetime.
Structural Breakdown
If the policyholder survives past the policy maturity age (e.g., 100 years), the insurer pays the maturity benefit, which generally equals the sum assured plus accumulated bonuses.
Historical/Related Context
The death benefit paid to the nominee is tax-free under Section 10(10D) of the Income Tax Act, subject to statutory premium conditions.
Causal Reasoning
Whole life insurance premiums are significantly higher than term insurance premiums because a portion of the premium funds the cash value and the payout is mathematically guaranteed.
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Module 09
5 of 12 MCQs
PORTFOLIO MANAGEMENT SERVICES (PMS)
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
What is the SEBI-mandated minimum investment threshold required to participate in a Portfolio Management Service (PMS) in India?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The minimum ticket size required to invest in a Portfolio Management Service in India is ₹50 lakh.
Concept Definition
PMS offerings are customized investment vehicles tailored for high-net-worth individuals (HNIs) who have the risk capacity for actively managed, concentrated portfolios. Eligible entities include Resident Individuals, HUFs, Private and Public Companies, NRIs, and specific Partnership Firms, Trusts, and Societies.
Historical/Related Context
SEBI initially set the minimum at ₹5 lakh in 1993, raised it to ₹25 lakh, and subsequently increased the threshold to ₹50 lakh in January 2020.
Question 2:
To prevent portfolio over-concentration, financial experts generally recommend allocating 10 to 20 per cent of total equity capital to a Portfolio Management Service (PMS). Based on this guideline, a PMS is most suitable for investors with a total equity exposure of at least what amount?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
Experts recommend allocating 10 to 20 per cent of total equity capital to PMS, making it most suitable for investors who have a total equity exposure of ₹2.5 crore to ₹5 crore or above.
Question 3:
Which statement accurately describes the typical portfolio concentration strategy of a Portfolio Management Service (PMS) compared to standard mutual funds?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
PMS portfolios are highly concentrated, typically holding 15 to 25 stocks and relying on high-conviction alpha generation rather than index-hugging diversification.
Structural Breakdown
In contrast to a PMS, mutual funds generally cap single-stock exposure at 10 per cent and hold 50 to 100 or more stocks to strictly manage volatility and liquidity risks.
Question 4:
Consider the following statements regarding execution styles in Portfolio Management Services (PMS):
1) In a Discretionary PMS, the manager has the legal right to execute trades in the client's Demat account without seeking prior permission for every transaction.
2) In a Non-Discretionary PMS, the manager acts as an advisor and the investor must manually authorize every transaction before execution.
Which of the above statements is/are correct?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
Both statements are correct. A Discretionary PMS allows the manager to take independent investment decisions and execute trades instantly, whereas a Non-Discretionary PMS requires the investor to manually authorize every transaction before the manager can execute it.
Concept Definition
Both styles fall under the SEBI ₹50 lakh minimum investment rule. Discretionary PMS is best suited for busy professionals who cannot monitor the market during trading hours, while Non-Discretionary PMS suits investors who want to learn or have complex tax structures requiring manual execution control. A third type, Advisory PMS, involves the manager providing only investment advice while the investor handles all execution through their own broker.
Structural Breakdown
Discretionary PMS offers total agility and execution speed, removing execution delays, but typically charges higher performance fees. Non-Discretionary PMS gives the investor absolute control over tax lots and execution, and managers often charge a lower fee or waive the performance fee entirely since the investor assumes the execution timing risk.
Question 5:
Which legal instrument is strictly required by the Depository Participant (DP) to allow a portfolio manager to operate a Discretionary PMS in the investor's Demat account?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Discretionary PMS mandates require a registered Power of Attorney (PoA) with the Depository Participant (DP) so the manager can execute trades independently.
Structural Breakdown
If an investor wishes to switch from a non-discretionary to a discretionary mandate later, they must give written notice and update this Power of Attorney legal paperwork to enable the manager's trading terminal.
You’ve completed 5 of 12 PORTFOLIO MANAGEMENT SERVICES (PMS) MCQs
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Module 10
5 of 13 MCQs
ALTERNATIVE INVESTMENT FUNDS (AIF)
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Under SEBI's Alternative Investment Fund (AIF) regulations, how are the three primary categories classified based on their investment strategies?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Category I AIFs invest in economically desirable sectors (startups, infrastructure, social ventures); Category II AIFs are private market funds (private equity, real estate, debt) that do not use leverage other than for daily operations; Category III AIFs employ complex trading strategies, including derivatives and leverage, for short-term capital appreciation.
Concept Definition
Alternative Investment Funds (AIFs) are privately pooled investment vehicles in India that collect funds from sophisticated investors to invest in alternative asset classes.
Structural Breakdown
Category I subtypes include Venture Capital Funds (VCFs), Angel Funds, SME Funds, Infrastructure Funds, and Social Venture Funds. Category II subtypes include Private Equity Funds, Debt Funds, Real Estate Funds, Distressed Asset Funds, and Fund of Funds (FoF). Category III exclusively houses hedge funds, PIPE (Private Investment in Public Equity) funds, and long-short equity funds.
Question 2:
Consider the following statements regarding the minimum investment threshold for a standard Alternative Investment Fund (AIF):
1) The minimum investment amount for an individual investor across all three standard AIF categories is ₹1 crore.
2) If spouses invest jointly, the ₹1 crore minimum threshold must be met by each individual separately, totaling ₹2 crore.
Which of the above statements is/are correct?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Statement 1 is correct; the standard minimum investment barrier for an ordinary investor across all three AIF Categories remains ₹1 crore. Statement 2 is incorrect because, for joint investors (like spouses) investing in an AIF, the ₹1 crore minimum threshold applies to the joint holding as a single entity, not per individual.
Concept Definition
These high thresholds exist because AIFs are designed exclusively for sophisticated investors, including High Net-Worth Individuals (HNIs), family offices, and institutional investors with high risk tolerance.
Question 3:
While Category I and Category II Alternative Investment Funds (AIFs) primarily target unlisted private markets, which asset class is heavily targeted by Category III AIFs?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
Category I and II AIFs primarily target unlisted private markets, whereas Category III AIFs heavily target listed equities and derivatives using complex trading strategies.
Question 4:
What is the minimum fund corpus required to launch a standard Alternative Investment Fund (AIF) scheme, excluding special sub-categories like Angel Funds?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
The minimum scheme corpus required to launch a standard AIF scheme (across Category I, II, and III) is ₹20 crore.
Concept Definition
All AIFs operating in India must maintain this minimum corpus and be strictly registered with SEBI under the SEBI (Alternative Investment Funds) Regulations, 2012.
Structural Breakdown
An AIF can be established legally as a trust, a company, a limited liability partnership (LLP), or a body corporate. Though AIF units are generally illiquid, SEBI permits the transfer or alienation of AIF units between eligible investors subject to the conditions laid out in the Private Placement Memorandum.
Question 5:
To ensure diversification, SEBI enforces single-company investment concentration limits for Alternative Investment Funds (AIFs). What are the maximum single-company investment caps for Category I/II AIFs and Category III AIFs, respectively?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
To ensure diversification, a Category I or Category II AIF's investment in any single company cannot exceed 25 per cent of the total fund corpus, whereas a Category III AIF faces a stricter limit and cannot invest more than 10 per cent of its investible funds in a single investee company.
Structural Breakdown
Under the SEBI framework, an exception exists for "Large Value Accredited Investors" committing over ₹10 crore, who can negotiate specific deviations from these standard AIF concentration norms.
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Module 11
5 of 28 MCQs
RISK PROFILING, INVESTMENT ADVISORY & DIGITAL WEALTH
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Which of the following statements correctly distinguishes an investor's risk capacity from their risk tolerance?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Risk capacity is the objective financial ability to absorb potential losses without jeopardizing critical goals, whereas risk tolerance is the subjective emotional willingness to endure market volatility.
Concept Definition
Risk profiling is the structured process of evaluating these metrics—using a documented questionnaire capturing variables like age, dependents, and past experiences—before recommending mutual fund schemes.
Structural Breakdown
Risk capacity relies on objective metrics (income stability, expenses, time horizon, liquidity needs, number of dependents). Risk tolerance relies on subjective factors (psychological comfort, behavioral biases, past investment experiences).
Question 2:
When an investor's objective risk capacity significantly differs from their subjective risk tolerance, how must a mutual fund distributor or investment adviser align the recommended portfolio?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
An optimal investment portfolio must always align with the lower of the investor's risk capacity or risk tolerance to ensure product suitability and prevent financial ruin or panic selling.
Structural Breakdown
If a client has high risk capacity but low tolerance, they need a conservative portfolio to prevent behavioral errors like panic selling during downturns. Conversely, a client with low capacity but high tolerance must be restricted to a conservative or moderate portfolio to prevent catastrophic losses they cannot objectively afford. Software validation requirements support this suitability application, and the assessment should be reviewed annually.
Question 3:
Under the mutual fund risk profiling framework, what is the procedural requirement regarding the client's consent on the risk assessment?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The client must give explicit consent to the assessed risk profile and any subsequent trades before proceeding with investments.
Structural Breakdown
The Investment Adviser (IA) is required to carry out risk profiling and convey it to the client. The client must explicitly consent before the IA executes any trade on their behalf, serving as a timing logic safeguard.
Question 4:
According to SEBI's regulations for Investment Advisers (IAs), what is the rule regarding assured or fixed returns for mutual fund clients?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
SEBI regulations strictly prohibit Investment Advisers from guaranteeing any returns, accuracy, or risk-free investments.
Structural Breakdown
Any assured or fixed return schemes are prohibited by law for IAs. The adviser must convey the assessed risk profile to the client and make it clear that the investment does not guarantee returns and is subject to market risks.
Question 5:
Which of the following conditions generally acts to increase an investor's objective risk capacity?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
A longer investment time horizon increases an investor's objective risk capacity because it provides more time to recover from cyclical market drawdowns.
Structural Breakdown
Conversely, high near-term liquidity needs significantly reduce an investor's risk capacity, regardless of their emotional willingness to take on risk. Both time and liquidity are objective mathematical factors distinct from psychological tolerance.
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Module 12
5 of 21 MCQs
BEHAVIOURAL FINANCE, ASSET ALLOCATION & PORTFOLIO ANALYTICS
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Which behavioral bias describes the phenomenon where the psychological pain of losing money is felt roughly twice as intensely as the joy of gaining the same amount?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Loss aversion is the behavioral bias where the psychological pain of losing money is felt roughly twice as intensely as the joy of gaining the equivalent amount.
Causal Reasoning
Because of this disproportionate fear of realizing a loss, loss aversion frequently causes investors to hold onto losing investments too long in hopes of breaking even, while selling winning investments too early to lock in gains.
Question 2:
An investor continually seeks out financial news articles that support their decision to hold a specific underperforming stock, while dismissing analyst reports that highlight the company's deteriorating fundamentals. Which behavioral bias is this investor exhibiting?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
The investor is exhibiting confirmation bias, which is the tendency to seek out, interpret, and favor information that confirms pre-existing beliefs while ignoring or dismissing contradictory evidence.
Structural Breakdown
Confirmation bias often leads to under-diversification and the failure to recognize fundamental deterioration in a favored asset or strategy.
Causal Reasoning
When large groups of investors collectively succumb to confirmation and other behavioral biases, their flawed decision-making contributes directly to broader market inefficiencies and pricing anomalies.
Question 3:
Which behavioral bias is an investor demonstrating if they exhibit an unjustified belief in their own stock-picking ability, forecasting skills, or access to superior information compared to the broader market?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
Overconfidence bias is an investor's unjustified belief in their own stock-picking ability, forecasting skills, or access to superior information compared to the broader market.
Structural Breakdown
Overconfident investors tend to trade excessively, which generally leads to higher transaction costs, tax drags, and lower net returns. Maintaining broad asset class diversification acts as a structural defense against the concentrated risks caused by this emotional decision-making.
Question 4:
An investor refuses to sell a significantly depreciated stock because they are irrationally fixated on the stock's historical 52-week high rather than evaluating its current fundamental valuation. Which behavioral bias is primarily responsible for this decision?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The investor is experiencing anchoring bias, which is the tendency to rely too heavily on the first piece of information encountered—such as an asset's purchase price or its historical high—when making financial decisions.
Causal Reasoning
Because they anchor their expectations to that specific historical price, investors often refuse to accept a loss and sell a depreciated asset even when its fundamental valuation has permanently deteriorated.
Question 5:
Which behavioral bias involves investors mimicking the actions and decisions of a larger group rather than relying on independent financial analysis?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Herd mentality is the behavioral bias where investors mimic the actions and decisions of a larger group rather than relying on their own independent financial analysis.
Structural Breakdown
Establishing automated investment plans, such as Systematic Investment Plans (SIPs), or implementing strict pre-defined rules for entry and portfolio rebalancing can systematically counteract this emotional decision-making.
Causal Reasoning
Herding behavior frequently fuels asset bubbles during prolonged bull markets and exacerbates panic selling during market crashes.
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Module 13
5 of 17 MCQs
FINANCIAL PLANNING, LIFE CYCLE, RETIREMENT & NPS
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Which phase of the financial life cycle typically occurs during an individual's early to mid-career and is characterized by a primary objective to build wealth through a growth-oriented portfolio?
Reveal AnswerHide Answer
Correct Answer: D
Direct Answer
The Accumulation Phase is the initial stage of a financial life cycle, typically occurring during an individual's early to mid-career, where the primary objective is to build wealth and save for long-term goals.
Structural Breakdown
During this phase, investors generally have a higher risk capacity due to a long time horizon, allowing for a growth-oriented strategy with a heavy allocation to equities. However, life cycle planning requires ongoing monitoring because shifts in personal health or family circumstances can alter this risk capacity abruptly.
Question 2:
How does a financial portfolio generally transition when an investor enters the Consolidation Phase of their financial life cycle?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
When an investor enters the Consolidation Phase, the portfolio's risk profile is typically reduced by shifting a portion of assets from equities into fixed-income or less volatile instruments to protect the accumulated capital.
Concept Definition
The Consolidation Phase occurs during peak earning years as an individual approaches retirement, requiring a strategic shift in focus from aggressive growth to wealth preservation and income generation.
Question 3:
Which description accurately defines the Spending (or Decumulation) Phase of an individual's financial life cycle?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The Spending (or Decumulation) Phase begins at retirement when the individual stops relying on earned income and instead begins withdrawing from their accumulated portfolio assets to fund ongoing living expenses.
Question 4:
Investors in the Spending Phase are highly vulnerable to sequence of returns risk. What defines this specific risk?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Sequence of returns risk occurs when a market downturn happens early in retirement, causing early asset liquidations that permanently deplete the portfolio's ability to compound and sustain long-term withdrawals.
Structural Breakdown
To manage this risk effectively during the Spending Phase, an investor must determine a sustainable withdrawal rate and maintain sufficient liquid reserves to avoid being forced to sell depreciated assets during market corrections.
Question 5:
Which phase of the financial life cycle focuses primarily on minimizing estate taxes, avoiding legal disputes, and ensuring assets are distributed according to the benefactor's specific wishes?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
The Gifting (or Legacy) Phase focuses on the structured transfer of remaining wealth to heirs, beneficiaries, or charitable organizations, with primary objectives including minimizing estate taxes, avoiding legal disputes, and ensuring precise distribution according to the benefactor's wishes.
Structural Breakdown
This structured transfer can take effect either during the individual's lifetime or posthumously. Managing this transition correctly is critical, as moving between life cycle phases usually involves major life events that fundamentally alter liquidity needs and risk capacity.
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Module 14
5 of 6 MCQs
ESTATE PLANNING
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
In the context of estate planning, what is a fundamental operational difference between a standard Will and a Private Trust?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
A Will is a legal testamentary document that takes effect only after the testator's death, whereas a Private Trust transfers ownership to a trustee for the benefit of specified individuals and can take effect immediately during the settlor's lifetime.
Structural Breakdown
During the testator's lifetime, a Will is inherently flexible and can be altered, amended (via a codicil), or fully revoked at any time. It is also possible to create a "Testamentary Trust," which is a specific type of trust drafted within a Will that only comes into existence upon the death of the testator.
Question 2:
Following the Repealing and Amending Act, 2025, what is the current legal status of obtaining a probate for Wills executed in the presidential towns of Mumbai, Kolkata, and Chennai under the Indian Succession Act?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Following the Repealing and Amending Act, 2025, the mandatory requirement to obtain a probate for Wills executed in Mumbai, Kolkata, and Chennai was completely abolished.
Structural Breakdown
The 2025 Act omitted Section 213 of the Indian Succession Act, effectively ending the compulsory probate process in India. Prior to this, families in these presidential towns faced significant delays, public notices, and court fees, which made transferring assets into a Private Trust during the settlor's lifetime a popular alternative to bypass probate.
Question 3:
How do revocable and irrevocable trusts fundamentally differ in their structure regarding the creator’s ongoing authority?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
In a revocable trust, the settlor (creator) retains the power to alter or terminate the trust arrangement, whereas in an irrevocable trust, the settlor relinquishes control and cannot easily amend it.
Structural Breakdown
Irrevocable trusts require the settlor to genuinely give up legal ownership and control of the assets to the trustee; retaining excessive control can invalidate the trust's legal protections.
Question 4:
Which legal structure is specifically used to effectively ring-fence a creator's assets, protecting them from future claims by the creator's creditors?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
An irrevocable Private Trust effectively ring-fences assets, protecting them from future claims by the settlor's creditors.
Structural Breakdown
A standard Will cannot provide this lifetime creditor protection. To maintain this ring-fencing protection in an irrevocable trust, the settlor must genuinely give up legal ownership and control; if the settlor retains excessive control, it can invalidate the trust's protective benefits.
Question 5:
When comparing privacy in estate planning, how does a Private Trust differ from a standard Will?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
A Will becomes a matter of public record once it is submitted for probate, whereas a Private Trust remains a highly confidential private agreement between the settlor and trustee.
Structural Breakdown
In addition to privacy, a Private Trust provides continuity of asset management if the settlor suffers severe medical incapacity during their lifetime. However, setting up a trust involves higher immediate structuring and compliance costs compared to drafting a Will, and transferring immovable property into a trust during the settlor's lifetime may attract stamp duty charges.
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Module 15
5 of 14 MCQs
WEALTH MANAGEMENT, CLIENT SUITABILITY & RELATIONSHIP MANAGEMENT
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
To effectively execute client acquisition strategies, wealth management firms are advised to define their Ideal Client Profiles (ICPs). Which of the following best represents a common ICP segmentation?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Ideal Client Profiles (ICPs) should be explicitly defined by segmenting targets precisely into categories such as mass affluent, high-net-worth, business owner, corporate executive, or multi-family.
Structural Breakdown
Once ICPs are defined, firms track Client Acquisition ROI Metrics (such as conversion rates, cost per acquisition, and client lifetime value) and Sales Pipeline Metrics (such as proposal turnaround time and onboarding completion rates).
Causal Reasoning
Trying to be everything to everyone and lacking focus in targeting specific ICPs dilutes messaging and is a common growth mistake for wealth management firms.
Question 2:
A new wealth-management client is referred to a bank relationship manager by the client’s chartered accountant. Before recommending any investment product, what should the relationship manager do first?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The first step should be to understand the client before recommending a product.
Concept Definition
A needs-based wealth-management process begins by identifying the client’s financial goals, investment horizon, liquidity requirements, existing portfolio, and risk profile.
Causal Reasoning
Product selection should follow the client assessment. Starting with a product pitch can result in an unsuitable recommendation even when the product itself is legitimate.
Question 3:
Which statement best describes the typical difference between servicing an Ultra High Net Worth (UHNW) client and a mass-affluent client?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
UHNW relationships typically require more customised and high-touch servicing, while mass-affluent models generally rely more heavily on scalable service structures.
Structural Breakdown
UHNW clients may require customised asset allocation, estate-planning coordination, concentrated-wealth management, liquidity planning, and access to specialised investment solutions. Mass-affluent clients can often be served efficiently through standardised advisory processes supported by digital tools.
Causal Reasoning
The distinction is driven by differences in financial complexity and service needs, not merely by account size.
Question 4:
Which statement correctly distinguishes a Single-Family Office from a Multi-Family Office?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
A Single-Family Office is established to serve one family, whereas a Multi-Family Office serves several unrelated families.
Concept Definition
Family offices coordinate complex wealth requirements that may include investment management, succession planning, tax coordination, reporting, philanthropy, and family governance.
Structural Breakdown
The defining distinction is the number of families served. It is not based on a compulsory asset class or investment product.
Question 5:
A wealth executive recommends a high-commission investment product to a conservative client even though the product does not match the client’s objectives or risk profile. The executive also highlights potential returns without adequately explaining the risks. Which principle is most clearly violated?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
The recommendation violates the principles of suitability and fair disclosure.
Concept Definition
Suitability requires a recommended product to be consistent with the investor’s needs, objectives, time horizon, liquidity requirements, and risk profile. Fair disclosure requires material risks and relevant product features to be communicated properly.
Causal Reasoning
A product should not be recommended merely because it pays a higher commission. Commission-driven recommendations that disregard client suitability create a serious mis-selling risk.
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Module 16
5 of 13 MCQs
KYC, AML & FINANCIAL CRIME COMPLIANCE
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Consider the following statements regarding the KYC Registration Agency (KRA) framework in India:
1) KRA interoperability ensures that once an investor is KYC-compliant with one SEBI-registered intermediary, they do not need to repeat the process for others.
2) The KRA must independently validate the KYC records within 10 days of receipt.
Which of the above statements is/are correct?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Only statement 1 is correct. KRA interoperability prevents redundant KYC, whereas KRAs must independently validate core attributes within 2 working days of receipt rather than 10 days.
Concept Definition
The KRA is a SEBI-registered agency (such as CAMS, CVL, NDML, DotEx, or KFintech) that maintains investor KYC records centrally.
Structural Breakdown
When an intermediary uploads KYC data (which must be done within 3 working days), the KRA cross-references details like PAN and Aadhaar against official government databases. The current framework mandates that this independent validation must be completed within 2 working days.
Historical/Related Context
The KRA system was introduced under SEBI's 2011 regulations with a longer 10-day processing window, but subsequent risk-management master circulars drastically shortened the timelines to curb identity fraud and enhance cyber security.
Causal Reasoning
Shortening the validation window to 2 working days prevents prolonged market access to unverified accounts, ensuring system-wide data integrity without compromising the benefits of seamless cross-intermediary interoperability.
Question 2:
Consider the following statements regarding the documentation and verification process for opening a mutual fund account:
1) Investors must undergo an In-Person Verification (IPV) to confirm their physical existence.
2) A PAN card serves as the sole Officially Valid Document (OVD) required to establish both identity and address.
Which of the above statements is/are correct?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
Only statement 1 is correct. Investors must complete an In-Person Verification (IPV), but a PAN card does not qualify as an OVD for address proof.
Concept Definition
IPV is a mandatory process where an authorized official or intermediary verifies that the investor physically exists and matches their submitted documents, often conducted via video (VCIP).
Structural Breakdown
An Officially Valid Document (OVD) must establish identity and address. Valid OVDs include passports, driving licenses, voter ID cards, and Aadhaar. PAN cards are mandatory for financial transactions but only prove identity, not address. Additionally, FATCA/CRS declarations are required to identify foreign tax residency.
Question 3:
Under the Reserve Bank of India's periodic KYC updation (Re-KYC) framework, what are the mandatory maximum timeframes for updating customer records based on their risk categorization?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
RBI mandates Re-KYC at least once every 2 years for high-risk customers, 8 years for medium-risk customers, and 10 years for low-risk customers.
Structural Breakdown
The periodic updation timeline depends strictly on the customer's risk profile. If there is no change in KYC information, customers can simply submit a "no-change declaration" through digital channels like the bank's mobile app. A fresh KYC process is also triggered if a minor account holder turns into a major.
Question 4:
What is the regulatory restriction for accounts opened using non-face-to-face onboarding methods, such as OTP-based e-KYC?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Accounts opened via non-face-to-face methods (like OTP-based Aadhaar e-KYC) must be converted into fully verified KYC accounts within one year.
Structural Breakdown
If the customer fails to complete full KYC verification (such as Video KYC or biometric verification) within the one-year window, the bank is required to freeze the account, preventing further transactions.
Question 5:
Under India's financial intelligence reporting framework, which scenario strictly requires a reporting entity to file a Cash Transaction Report (CTR)?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
A CTR must be filed for cash transactions exceeding Rs. 10 lakh, including any connected series of cash transactions within a single month that collectively breach this limit.
Structural Breakdown
CTRs are mechanical, value-driven reports submitted to FIU-IND. They are batched and must be filed by the 15th of the succeeding month, regardless of whether the transactions appear suspicious.
Causal Reasoning
The RBI Master Direction (Paras 35 and 36) enforces these limits to ensure regulated entities monitor large and complex transactions that carry no apparent economic rationale.
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Module 17
5 of 7 MCQs
REITs & InvITs
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
What is the basic investment purpose of a Real Estate Investment Trust (REIT)?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
A REIT enables investors to obtain exposure to income-generating real-estate assets through a regulated pooled investment structure.
Concept Definition
Instead of directly buying an entire commercial property, an investor can acquire units of a REIT and participate in the economics of the underlying real-estate portfolio.
Structural Breakdown
REITs typically involve parties such as the sponsor, trustee and manager, with the underlying real-estate assets held directly or through permitted holding structures/SPVs.
Question 2:
Under the current SEBI InvIT framework, what minimum portion of the InvIT's net distributable cash flows (NDCF) must generally be distributed to unitholders?
Reveal AnswerHide Answer
Correct Answer: C
Direct Answer
An InvIT is generally required to distribute not less than 90% of its net distributable cash flows to unitholders.
Structural Breakdown
For publicly offered InvITs, distributions are required at least once every six months in each financial year, while privately placed InvITs are subject to at least annual distribution, subject to the applicable SEBI framework.
Conceptual Link: This high distribution requirement is one of the features that makes InvITs relevant for investors seeking exposure to cash-generating infrastructure assets.
Question 3:
Under the SEBI REIT framework, what minimum proportion of the value of REIT assets is generally required to be invested in completed and rent and/or income-generating properties?
Reveal AnswerHide Answer
Correct Answer: D
Direct Answer
At least 80% of the value of REIT assets is generally required to be invested in completed and rent and/or income-generating properties.
Causal Reasoning
This requirement keeps the core portfolio focused on operational assets capable of generating income rather than allowing the REIT to function primarily as a property-development vehicle.
Exam Trap
The remaining permitted portion does not mean the REIT can freely invest in any asset. It remains subject to the investment conditions prescribed by SEBI.
Question 4:
Which pairing correctly describes the roles of the Trustee and Manager in a REIT structure?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
The Trustee holds the REIT assets in trust for the benefit of unitholders, while the Manager manages the assets and investments of the REIT.
Structural Breakdown
The separation of oversight and management creates an important governance mechanism.
Causal Reasoning
The Trustee has fiduciary and oversight responsibilities, while the Manager handles the operational and investment-management functions.
Question 5:
What is the principal difference between a REIT and an Infrastructure Investment Trust (InvIT)?
Reveal AnswerHide Answer
Correct Answer: A
Direct Answer
REITs primarily provide exposure to real estate assets, whereas InvITs provide exposure to infrastructure assets.
Concept Definition
Infrastructure assets may include projects such as roads, power transmission assets or other eligible infrastructure projects.
Structural Similarity: Both REITs and InvITs use trust-based investment structures and allow investors to participate through units.
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Module 18
5 of 15 MCQs
TAXATION OF INVESTMENTS
5 selected questions from Bank of Baroda Wealth Executive Exam 2026 - Professional Knowledge.
Question 1:
Which holding period and tax rate apply to short-term capital gains (STCG) on listed equity shares under Section 111A of the Income-tax Act, for transfers made on or after 23 July 2024?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Equity shares are considered short-term capital assets if held for 12 months or less, and STCG under Section 111A is taxed at 20% for transfers on or after 23 July 2024.
Structural Breakdown
Normal short-term capital gains that do not fall under Section 111A are added to the total taxable income and taxed at the individual's applicable slab rates.
Historical/Related Context
Before the 23 July 2024 amendment, the STCG tax rate on equity shares under Section 111A was 15%.
Question 2:
Under the Income-tax Act, which restriction applies to Short-Term Capital Gains (STCG) taxed under Section 111A when calculating total taxable income?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Taxpayers are not permitted to claim deductions under Sections 80C to 80U against short-term capital gains that are taxable under Section 111A.
Question 3:
For listed equity shares transferred on or after 23 July 2024, what is the applicable Long-Term Capital Gains (LTCG) tax rate and the annual exemption limit under Section 112A?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
For transfers on or after 23 July 2024, LTCG on equity shares is taxed at 12.5%, with an exemption available on gains up to Rs. 1.25 lakh per financial year.
Concept Definition
Equity shares are classified as long-term capital assets when they are held for a period of more than 12 months.
Structural Breakdown
This tax calculation is straightforward because the indexation benefit is not available for long-term capital gains under Section 112A.
Historical/Related Context
Prior to 23 July 2024, the LTCG tax rate for equity shares was 10% on gains exceeding Rs. 1 lakh.
Question 4:
A taxpayer sells listed equity shares that were purchased in 2015. Under Section 112A, the capital gains are grandfathered up to the highest price of the shares recorded on which specific cutoff date?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Gains on equity shares purchased before 31 January 2018 are grandfathered, meaning the cost of acquisition is adjusted to match the highest price recorded on that date, effectively exempting the gains accrued up to that point.
Question 5:
A resident individual earns Long-Term Capital Gains (LTCG) on equity shares taxed under Section 112A. Which statement correctly describes the interaction between these gains and the Section 87A tax rebate?
Reveal AnswerHide Answer
Correct Answer: B
Direct Answer
Taxpayers are explicitly prohibited from claiming the Section 87A tax rebate against the tax payable on Long-Term Capital Gains computed under Section 112A.
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