MCQs on Mutual Funds

What is a mutual fund?

• A type of savings account in a bank

• An investment vehicle that pools money from multiple investors to invest in a diversified portfolio of securities

• A type of government bond

• A loan provided by financial institutions

Who manages the investments in a mutual fund?

• Individual investors

• Bank managers

• Fund managers

• Stock brokers

What does NAV stand for in mutual funds?

• Net Account Value

• Non-Asset Value

• Net Asset Value

• Nominal Asset Value

Which of the following is a characteristic of an open-ended mutual fund?

• Fixed number of units

• Can be bought or sold at any time

• Traded on stock exchanges only

• Cannot be redeemed before maturity

What is an expense ratio in mutual funds?

• The fee charged for buying units

• The annual fee for managing and operating the fund

• The cost of selling the fund

• The penalty for early withdrawal

Which type of mutual fund primarily invests in stocks?

• Equity Fund

• Debt Fund

• Hybrid Fund

• Index Fund

What is the main purpose of diversification in mutual funds?

• To increase the management fees

• To minimize risk by investing in various securities

• To ensure a fixed return

• To focus on one sector for higher gains

Which type of mutual fund offers tax benefits under specific regulations?

• Index Fund

• Sector Fund

• ELSS (Equity Linked Savings Scheme)

• Debt Fund

Which of the following is NOT a type of mutual fund based on investment objective?

• Equity Fund

• Debt Fund

• Fixed Deposit Fund

• Hybrid Fund

What does SIP stand for in mutual fund investing?

• Systematic Interest Plan

• Standard Investment Plan

• Systematic Investment Plan

• Short-Term Investment Plan