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Mutual Funds and Investment Strategies
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Mutual Funds and Investment Strategies
Mutual Funds and Investment Strategies
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1
Question
How does a mutual fund help investors participate in financial markets?
Page 3
Answer
A mutual fund pools money from many investors and invests it in financial instruments.
2
Question
Which financial instruments can mutual funds invest in?
Page 3
Answer
Shares, bonds, government securities, gold, and money market instruments.
3
Question
Who manages the investments held by a mutual fund?
Page 3
Answer
Professional experts called fund managers manage the investments.
4
Question
How are mutual-fund profits or losses allocated among investors?
Page 3
Answer
Profits or losses are shared according to the amount each investor contributed.
5
Question
If 100 people invest ₹1,000 each, what amount is collected?
Page 3
Answer
The total amount collected is ₹1,00,000.
6
Question
What happens during the pooling stage of mutual-fund operations?
Page 3
Answer
Money from all investors is collected together.
7
Question
Which role does the fund manager perform after money is pooled?
Page 3
Answer
The fund manager invests the pooled money in shares, bonds, or other assets.
8
Question
What outcome follows when mutual-fund investments perform well?
Page 3
Answer
Investors earn returns.
9
Question
What outcome may follow when the market falls?
Page 3
Answer
Investors may face losses.
10
Question
What does NAV represent in a mutual fund?
Page 3
Answer
NAV is the value of one mutual-fund unit.
11
Question
How does NAV respond to market performance?
Page 3
Answer
NAV changes daily depending on market performance.
12
Question
Which mutual funds invest mainly in company shares?
Page 4
Answer
Equity mutual funds invest mainly in company shares.
13
Question
What risk-and-return profile characterizes equity mutual funds?
Page 4
Answer
They offer high return potential but involve higher risk.
14
Question
Which investment horizon is considered suitable for equity mutual funds?
Page 4
Answer
Equity mutual funds are suitable for long-term investment.
15
Question
Which instruments are emphasized in debt mutual funds?
Page 4
Answer
Debt mutual funds invest in bonds and government securities.
16
Question
Which investors are debt mutual funds described as suitable for?
Page 4
Answer
Debt mutual funds are suitable for cautious investors.
17
Question
What return pattern is associated with debt mutual funds?
Page 4
Answer
Debt mutual funds are associated with lower risk and stable returns.
18
Question
Which assets do hybrid mutual funds combine?
Page 4
Answer
Hybrid mutual funds invest in both shares and bonds.
19
Question
Why may hybrid mutual funds appeal to beginners?
Page 4
Answer
They offer balanced risk and balanced returns.
20
Question
Which benchmark does an index fund copy in the given example?
Page 4
Answer
An index fund may copy a stock-market index such as the NIFTY 50.
21
Question
What cost-related feature is associated with index funds?
Page 4
Answer
Index funds have a lower management cost.
22
Question
What does ELSS stand for in mutual-fund terminology?
Page 4
Answer
ELSS stands for Equity Linked Savings Scheme.
23
Question
What financial purpose do ELSS funds serve?
Page 4
Answer
ELSS funds help investors save tax under income tax rules.
24
Question
How long is the stated lock-in period for ELSS funds?
Page 4
Answer
The lock-in period is 3 years.
25
Question
What are companies offering mutual funds called?
Page 5
Answer
They are called Asset Management Companies (AMCs).
26
Question
Which institution regulates mutual-fund providers in India?
Page 5
Answer
The Securities and Exchange Board of India regulates them.
27
Question
How does professional management benefit mutual-fund investors?
Page 5
Answer
Experts manage the investments, which helps beginners.
28
Question
How does diversification reduce mutual-fund risk?
Page 5
Answer
Money is invested across many companies and sectors, reducing risk.
29
Question
What makes mutual-fund investment affordable for many investors?
Page 5
Answer
Investors can begin with small amounts such as ₹100 or ₹500.
30
Question
What does liquidity generally allow mutual-fund investors to do?
Page 5
Answer
Most mutual funds allow investors to withdraw money easily.