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    Mutual Fund Quiz - Understand the Basics of Mutual Fund

    • Q1. Which of the following is NOT a reason to invest in mutual funds?
      • Wrong!

        Personal customized portfolio

        Sorry! It appears you are just getting started with mutual funds. As a simple investing tool, mutual funds allow you to invest as low as Rs. 500 in a diversified portfolio, which is managed by a professional. By pooling money from several people in one place, it acquires the flexibility to invest in different kinds of investment opportunities, which as an individual investor you may not be able to access. Truly,”Mutual Funds SahiHai!”

        Sorry! It appears you are just getting started with mutual funds. As a simple investing tool, mutual funds allow you to invest as low as Rs. 500 in a diversified portfolio, which is managed by a professional. By pooling money from several people in one place, it acquires the flexibility to invest in different kinds of investment opportunities, which as an individual investor you may not be able to access. Truly,”Mutual Funds SahiHai!”

        Sorry! It appears you are just getting started with mutual funds. As a simple investing tool, mutual funds allow you to invest as low as Rs. 500 in a diversified portfolio, which is managed by a professional. By pooling money from several people in one place, it acquires the flexibility to invest in different kinds of investment opportunities, which as an individual investor you may not be able to access. Truly,”Mutual Funds SahiHai!”

        Perfect! You really understand mutual funds. “Mutual Funds SahiHai”

    • Q2. Which of the following instruments can mutual funds scheme invest in?
      • Wrong!

        All of the above

        Missed it! Lot of investors are not really aware that a mutual fund can invest in almost any investment including stocks, corporate bonds, Government securities, Gold, etc. So, don’t hold back and use mutual funds to build your entire portfolio across various assets.

        Missed it! Lot of investors are not really aware that a mutual fund can invest in almost any investment including stocks, corporate bonds, Government securities, Gold, etc. So, don’t hold back and use mutual funds to build your entire portfolio across various assets.

        Missed it! Lot of investors are not really aware that a mutual fund can invest in almost any investment including stocks, corporate bonds, Government securities, Gold, etc. So, don’t hold back and use mutual funds to build your entire portfolio across various assets.

        Missed it! Lot of investors are not really aware that a mutual fund can invest in almost any investment including stocks, corporate bonds, Government securities, Gold, etc. So, don’t hold back and use mutual funds to build your entire portfolio across various assets.

        Bingo! You are outstanding! Lot of investors are not really aware that a mutual fund can invest in almost any investment including stocks, corporate bonds, Government securities, Gold, etc. You can use mutual funds to build your entire portfolio across various assets.

        Missed it! Lot of investors are not really aware that a mutual fund can invest in almost any investment including stocks, corporate bonds, Government securities, Gold, etc. So, don’t hold back and use mutual funds to build your entire portfolio across various assets.

    • Q3. A diversified equity fund is one which
      • Wrong!

        Invests in stocks across various sectors

        Did you choose this option by mistake?Looks like. Surely you know that a diversified fund can invest across sectors, themes or market capitalization without any major limitation. A sectoral fund invests in a particular sector such as Pharma and a thematic fund in a particular theme such as Infrastructure. By limiting themselves, the risk profile of such funds also goes up. In contrast, a diversified fund reduces risk by spreading across across sectors, themes and invests in best of the opportunities.

        Did you choose this option by mistake?Looks like. Surely you know that a diversified fund can invest across sectors, themes or market capitalization without any major limitation. A sectoral fund invests in a particular sector such as Pharma and a thematic fund in a particular theme such as Infrastructure. By limiting themselves, the risk profile of such funds also goes up. In contrast, a diversified fund reduces risk by spreading across across sectors, themes and invests in best of the opportunities.

        Awesome! You are truly deep down with mutual funds. A diversified fund can invest across sectors, themes or market capitalization without any major limitation.

        Did you choose this option by mistake?Looks like. Surely you know that a diversified fund can invest across sectors, themes or market capitalization without any major limitation. A sectoral fund invests in a particular sector such as Pharma and a thematic fund in a particular theme such as Infrastructure. By limiting themselves, the risk profile of such funds also goes up. In contrast, a diversified fund reduces risk by spreading across across sectors, themes and invests in best of the opportunities.

    • Q4. SIP is a
      • Wrong!

        Method of regular investment

        You might be thinking what a simple questionthis is. But you know the fact is many investors till today consider a SIP or Systematic Investment Plan to be a mutual fund scheme than a method to invest in mutual funds. Keep SIPping!

        You are not alone in this misunderstanding. SIP stands for Systematic Investment Plan – a method to invest regularly in mutual fund schemes. It is not a mutual fund scheme by itself. There are several other benefits of SIP that you should find out.

        You are not alone in this misunderstanding. SIP stands for Systematic Investment Plan – a method to invest regularly in mutual fund schemes. It is not a mutual fund scheme by itself. There are several other benefits of SIP that you should find out.

        You are not alone in this misunderstanding. SIP stands for Systematic Investment Plan – a method to invest regularly in mutual fund schemes. It is not a mutual fund scheme by itself. There are several other benefits of SIP that you should find out.

    • Q5. Does a balanced fund always invest its money in the ratio of 50:50 in equity and fixed income?
      • Wrong!

        No

        Hard luck! Of course, you expect a balanced fund to be that – balanced.Not in reality. Here’s some trivia for you. A balanced fund is typically a hybrid fund, can also invest in higher ratio of equity (maximum up to 75%) and lower ratio of fixed income depending upon its scheme objective. Generally, many balanced funds aim to keep their gross equity exposure 65% and above to get the added advantage of equity taxation.

        The odds of getting the wrong answer to this question were high. But not you, Genius! Here’s some trivia for you. A balanced fund is typically a hybrid fund, which can also invest in higher ratio of equity (maximum up to 75%) and lower ratio of fixed income depending upon its scheme objective. Generally, many balanced funds aim to keep their gross equity exposure 65% and above to get the added advantage of equity taxation.

    • Q6. A liquid fund can invest its money in which of the following
      • Wrong!

        Money market instruments of less than 91 days maturity

        Not an easy one for sure. An important aspect of a liquid fund is to invest only in those instruments that are expected to mature within 91 days. That keeps it relatively safe and ‘liquid’. It tends to avoid interest rate risk as much as possible.

        Super Duper! You now enter the Investors Hall of Fame! There is one simple guideline for a liquid fund – it invests only in those instruments that are expected to mature within 91 days. It tends to avoid interest rate risk as much as possible.

        Not an easy one for sure. An important aspect of a liquid fund is to invest only in those instruments that are expected to mature within 91 days. That keeps it relatively safe and ‘liquid’. It tends to avoid interest rate risk as much as possible.

        Not an easy one for sure. An important aspect of a liquid fund is to invest only in those instruments that are expected to mature within 91 days. That keeps it relatively safe and ‘liquid’. It tends to avoid interest rate risk as much as possible.

    • Q7. A mutual fund with a lower NAV or Net Asset Value is cheaper than one with a higher NAV?
      • Wrong!

        False

        One of the biggest myths that an investor suffers is that a High NAV fund is expensive and a Low NAV fund is cheaper. The cheap and expensive concept does not apply to mutual funds. A stock within a mutual fund can be cheap or expensive but not the fund itself. If at all, a high mutual fund NAV showcases experience of that fund. Don’t get lured by this. You are better off choosing experience.

        Hello myth breaker! The cheap and expensive concept does not apply to mutual funds. As you will agree, a mutual fund with high NAV showcases experience of that fund. Hope you carry your knowledge to break myths and light the lamps for other new investors too.

    • Q8. Banks are regulated by Reserve Bank of India. Mutual funds are regulated by?
      • Wrong!

        Securities & Exchange Board of India

        Full marks to you. SEBI has laid down the guidelines for effective functioning and governance of mutual funds.

        Tough luck! SEBI regulates mutual funds in India. It has laid down the guidelines for effective functioning and governance of mutual funds. Of course, it does not guarantee returns to you but provides a framework to help understand, compare and choose mutual funds with the most relevant information.

        Tough luck! SEBI regulates mutual funds in India. It has laid down the guidelines for effective functioning and governance of mutual funds. Of course, it does not guarantee returns to you but provides a framework to help understand, compare and choose mutual funds with the most relevant information.

        Tough luck! SEBI regulates mutual funds in India. It has laid down the guidelines for effective functioning and governance of mutual funds. Of course, it does not guarantee returns to you but provides a framework to help understand, compare and choose mutual funds with the most relevant information.

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