NISM VA Chapter 2: Concept And Role Of A Mutual Fund Questions and Answers

NISM VA Series 5A Questions and Answers PDF: Chapter 2

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Important MCQs on 2.1.1, 2.1.2, 2.1.3

1.What is a mutual fund?
A) A professionally managed investment vehicle
B) A traditional instrument of investment
C) A way of investing in different markets
D) A portfolio diversification strategy

2. What does it mean to invest through a mutual fund?
A) To compete with traditional instruments of investment
B) To get access to equities, bonds, money market instruments and/or other securities
C) To get a different product
D) To get a different way of investing

3. What is the primary role of mutual funds?
A) To help investors in earning an income or building their wealth
B) To offer a different way of investing
C) To diversify an investor’s portfolio
D) To provide professional fund management services

4. What is the difference between a fund and a scheme?
A) They are interchangeable terms
B) A fund is a type of scheme
C) A scheme is a type of fund
D) They have different investment objectives

5. How does investing in mutual funds promote economic development?
A) It benefits governments, companies, and other entities
B) It supports projects of goods and services companies
C) It boosts the revenue collection of the government through taxes
D) All of the above

6. How can mutual funds act as a market stabilizer?
A) By investing in foreign markets
B) By countering large inflows or outflows from foreign investors
C) By investing in high-risk securities
D) By providing low-interest loans to companies

7. What is the investment objective of an overnight fund?
A) To generate long-term capital appreciation
B) To generate regular income
C) To provide reasonable income along with high liquidity
D) To invest predominantly in equity and equity-related instrument

8. What is the investment objective of an equity fund?
A) To generate long-term capital appreciation
B) To generate regular income
C) To provide reasonable income along with high liquidity
D) To invest predominantly in equity and equity-related instruments

9. What is the investment objective of a hybrid fund?
A) To generate long-term capital appreciation
B) To generate regular income
C) To provide reasonable income along with high liquidity
D) To invest predominantly in equity and equity-related instruments

10. What is the investment objective of a long duration fund?
A) To generate long-term capital appreciation
B) To generate regular income
C) To provide reasonable income along with high liquidity
D) To invest predominantly in equity and equity-related instruments

11. What is the difference between investing in a mutual fund and investing in traditional instruments?
A) Mutual fund investments are professionally managed
B) Traditional instruments offer better returns
C) Mutual fund investments are more risky
D) Traditional instruments offer greater liquidity

12. What is a mutual fund scheme?
A) A type of investment vehicle
B) A pool of money with a pre-announced investment objective
C) A professional fund management service
D) A diversified portfolio of securities

13. What is the role of a mutual fund distributor?
A) To invest in mutual funds on behalf of investors
B) To understand the difference between investing in mutual funds and investing through mutual funds
C) To manage a mutual fund scheme
D) To offer financial advice to investors

14. What are the benefits of investing in a mutual fund?
a) Professional way of investing, portfolio diversification, and a regulated vehicle
b) Tax benefits, guaranteed returns, and lower risk
c) Higher interest rates and easier access to loans
d) All of the above

15. Who manages a mutual fund?
a) Asset management company
b) Government agency
c) Bank
d) Individual investors

16. What is the difference between a mutual fund and its schemes?
a) There is no difference
b) A mutual fund is an investment vehicle while a scheme is a type of investment
c) A mutual fund is a type of investment while a scheme is an investment vehicle
d) A mutual fund invests in securities markets while a scheme invests in traditional instruments of investment

Answers

1. Answer: A) A professionally managed investment vehicle
2. Answer: B) To get access to equities, bonds, money market instruments and/or other securities
3. Answer: A) To help investors in earning an income or building their wealth
4. Answer: A) They are interchangeable terms
5. Answer: D) All of the above
6. Answer: B) By countering large inflows or outflows from foreign investors
7. Answer: C) To provide reasonable income along with high liquidity
8. Answer: A) To generate long-term capital appreciation
9. Answer: A) To generate long-term capital appreciation
10. Answer: B) To generate regular income
11. Answer: A) Mutual fund investments are professionally managed
12. Answer: B) A pool of money with a pre-announced investment objective
13. Answer: B) To understand the difference between investing in mutual funds and investing through mutual funds
14. Answer: a) Professional way of investing, portfolio diversification, and a regulated vehicle
15. Answer: a) Asset management company
16. Answer: b) A mutual fund is an investment vehicle while a scheme is a type of investment

for more MCQs download our NISM VA Chapter 2 Questions and Answers all topics PDF. This pdf contains total 187 questions and answers from chapter 2. which is sufficient for students who are preparing for NISM Series V-A Mutual Fund Distributors Examination

PDF details

Pdf  quality	Excellent
Pdf size	189kb
Number of questions	187
Topics covered	Chapter 2 all topics
Questions type	Multiple Choice Questions

 

⇒Download NISM VA Chapter 2 Full PDF: Concept And Role Of A Mutual Fund All Topics Question Bank

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