Mutual Fund Distributors Free Demo Test 10

Explanation:

The basic meaning of asset allocation is to allocate an investor’s money across asset categories (like Equity, Debt, Gold etc.) in order to achieve the objective.

Explanation:

NSE’s MIBOR (Mumbai Inter-Bank Offered Rate) is based on short term money market. Liquid schemes invest in securities of upto 91 days’ maturity. Therefore, a short term money market benchmark such as NSE’s MIBOR is suitable.

Explanation:

Close-ended Schemes have an NFO Open Date and NFO Close Date. But, they have no Scheme Re-opening Date, because the scheme does not sell or re-purchase units. What ever sale-purchase of units takes place is between the investors on the stock exchange. So the unit capital of a closed-end fund does not change.

(The number of units issued by a scheme multiplied by its face value (Rs. 10) is the capital of the scheme–its Unit Capital).

Explanation:

Statement of Additional Information (SAI), has statutory information about the mutual fund or AMC, that is offering the scheme. Therefore, a single SAI is relevant for all the schemes offered by a mutual fund.

(Scheme Information Document (SID) has details of the particular scheme)

Explanation:

As per the Income Tax Act –

– Short term capital loss is to be set off against short term capital gain or long term capital gain.
– Long term capital loss can only be set off against long term capital gain.
– Capital loss, short term or long term, cannot be set off against any other head of income (e.g. salaries).

Explanation:

When the performance of a particular mutual fund scheme is advertised, the advertisement shall also include the performance data of all the other schemes managed by the fund managers of that particular scheme.In case the number of schemes managed by a fund manager is more than six, then the AMC may disclose the total number of schemes managed by that fund manager along with the performance data of top 3 and bottom 3 schemes managed by that fund manager in all performance related advertisements.

Explanation:

Interest rate risk is the risk that an investment’s value will change as a result of a change in interest rates. Interest rate risk is always associated with debt funds and not equity funds.

The interest rate risk varies for bonds with different maturities. Those with longer maturity would witness higher price fluctuations in comparison to those with shorter maturities. A money market fund is a type of a mutual fund that invests in high quality, short term debt instruments, cash and cash equivalents.

Explanation:

Suppose an investor has invested in a debt security that yields a return of 8 percent. Subsequently, yields in the market for similar securities rise to 9 percent. It stands to reason that the security, which was bought at 8 percent yield, is no longer such an attractive investment. It will therefore lose value.

(Conversely, if the yields in the market go down, the debt security will gain value. Thus, there is an inverse relationship between yields and value of such debt securities, which offer a fixed rate of interest).

Explanation:

The first step in financial goal setting is to identify events in life which will require major funding – like child education, marriage, retirement etc.

Asset allocation / Risk profile are looked into later while deciding the investments etc.

Explanation:

To cater to people with small saving potential and to increase reach of mutual fund products in urban areas and smaller towns, SEBI has allowed a transaction charge per subscription of Rs. 10,000/- and above to be paid to distributors of the mutual fund products. However, there shall be no transaction charges on direct investments.