ETFs, Debt funds, Liquid funds

Which of the following is true about ETFs?

• ETFs can only invest in bonds

• ETFs are always actively managed

• ETFs are usually passively managed and track an index

• ETFs cannot be traded on a stock exchange

How do ETFs typically maintain their price close to their Net Asset Value (NAV)?

• Through the intervention of a central bank

• Via the arbitrage mechanism by market participants

• By the fund manager adjusting the holdings daily

• Through government regulation

Which of the following is an advantage of investing in ETFs?

• High expense ratio compared to mutual funds

• Limited trading flexibility

• Ability to buy and sell during market hours

•  Lack of diversification

Which of the following is an advantage of investing in Gold ETFs compared to physical gold?

• Higher risk of theft

• Lower liquidity

•  No need for physical storage

• Higher transaction costs

________ provide two-way quotes for the ETFs on the stock exchange.

• AMC

• Custodians

• Authorized Participants

• Stock exchange

Which of the following category of people are not eligible to invest in Sovereign Gold Bonds?

• HUFs

• NRIs

• Trusts

• Universities

_________ are the funds which invest only in securities issued by the Government.

• Capital Protection Funds

• Balanced Funds

• Gilt Funds

• Fixed Maturity Plans

What does the ‘BBB’ rating for debt securities given by CRISIL indicate?

• Safest among corporate debentures.

• Safe, however in case environmental changes interest/principal payment may be affected.

• Safe, but depends on the company’s performance in future

• Represents risk of default.

1The money which the Authorized participants deposits to AMC for buying the bundled ETF units is known as _________.

Which of the following risks can be reduced by adjusting the maturity of the debt fund portfolio?

•    Market risk

• Interest rate risk

•     Credit risk

• Counterparty risk