Sheetal Jhaveri
Mutual funds have become an integral part of every individual's asset allocation. But with the ever-changing finance industry and the new rules brought out by SEBI, are you sure you are up-to-date on your mutual funds gyaan?
Let us find out by taking a simple quiz:
1. What is a mutual fund?
a) A professionally managed collective investment scheme which pools money from many investors and invests in stocks, bonds, short term money market instruments and other instruments
b) A professionally managed collective investment scheme which pools money from many investors and mainly invest in stocks.
c) A professionally managed collective investment scheme which pools money from many investors and mainly invest in debt instruments.
The correct answer is Option One
A professionally managed collective investment scheme which pools money from many investors and invests in stocks, bonds, short term money market instruments and other instruments
A professionally managed collective investment scheme which pools money from many investors and invests in stocks, bonds, short term money market instruments and other instruments
Quiz: Test your mutual fund gyaan
2. Most mutual funds offer investors the benefit of diversification, professionalism, management and liquidity?
a) True
b) False
c) Can't say
The correct answer is True
As they are professionally managed by fund managers, most of the schemes are open ended schemes and hence, an investor can buy or sell units on any working day and thus liquidity. As the fund invests in various products based on its investment objective and hence an investor's amount is diversified.
As they are professionally managed by fund managers, most of the schemes are open ended schemes and hence, an investor can buy or sell units on any working day and thus liquidity. As the fund invests in various products based on its investment objective and hence an investor's amount is diversified.
Quiz: Test your mutual fund gyaan
3. Advantage of mutual fund is?
a) You can double your money in five years
b) They are a risk-free investment
c) It offers an opportunity to invest in diversified, professionally managed basket of securities at a relatively small investment.
The correct answer is It offers an opportunity to invest in diversified, professionally managed basket of securities at a relatively small investment.
As for investment through SIP the minimum amount required is Rs 1,000. And for lump sum investment most of the funds have a minimum amount required as Rs 5,000. But again in Lump sum would advise to check with the fund details for the minimum amount required.
As for investment through SIP the minimum amount required is Rs 1,000. And for lump sum investment most of the funds have a minimum amount required as Rs 5,000. But again in Lump sum would advise to check with the fund details for the minimum amount required.
Quiz: Test your mutual fund gyaan
4. Mutual fund's NAV stands for?
a) New Asset Value
b) New Allocation Value
c) Net Asset Value
The correct answer is Net Asset Value
The net asset value is the market value of the asset held by the scheme minus expenses, divided by the number of units outstanding. This arrives at the price of the units of the fund at which an investor can buy or sell units of the fund.
The net asset value is the market value of the asset held by the scheme minus expenses, divided by the number of units outstanding. This arrives at the price of the units of the fund at which an investor can buy or sell units of the fund.
Quiz: Test your mutual fund gyaan
5. How often is NAV calculated?
a) Every working day
b) Once a week
c) Twice a week
The correct answer is Every working day
NAV for most of the fund is calculated at the end of each working day.
NAV for most of the fund is calculated at the end of each working day.
Quiz: Test your mutual fund gyaan
6. What is equity mutual fund?
a) A fund that principally invests in stocks where 75 per cent of the fund is invested in stocks and the balance in debt instrument and cash component.
b) A fund that principally invests in stocks where 80 per cent or more funds is invested in stocks and the balance is debt instrument and cash component.
c) A fund that principally invest in stocks where 60 per cent of the fund is invested in stocks and the balance in debt instrument and cash component.
The correct answer is A fund that principally invests in stocks where 80 per cent or more funds is invested in stocks and the balance is debt instrument and cash component.
Minimum investment in stocks should be at least 80 per cent of the fund for the fund to qualify under equity scheme. Equity mutual funds are principally categorised according to size, investment style, management style and geography that is domestic or international investments.
Minimum investment in stocks should be at least 80 per cent of the fund for the fund to qualify under equity scheme. Equity mutual funds are principally categorised according to size, investment style, management style and geography that is domestic or international investments.
Quiz: Test your mutual fund gyaan
7. What is the daily cut off time for which equity scheme applications are accepted at the same day's NAV?
a) 12 pm
b) 3 pm
c) 3.30 pm
The correct answer is 3 pm
Hence in order to get the same day NAV your fund you should submit your application before 3 pm. After that you get next day NAVs.
Hence in order to get the same day NAV your fund you should submit your application before 3 pm. After that you get next day NAVs.
Quiz: Test your mutual fund gyaan
8. What is debt mutual fund?
a) An investment pool in which core holdings are fixed income investments where 60 per cent of the fund is invested in fixed income investments and balance in equities
b) An investment pool in which core holdings are fixed income investments where at least 80 per cent of the fund is invested in fixed income investments.
c) An investment pool in which core holdings are fixed income investments where at least 70 per cent of the fund is invested in fixed income investments and balance in equities.
The correct answer is An investment pool in which core holdings are fixed income investments where at least 80 per cent of the fund is invested in fixed income investments.
A debt fund may invest in short term or long term bonds, securitised products, money market instruments or floating rate debt bonds. The main investing objectives of a debt fund will usually be preservation of capital and generation of income.
A debt fund may invest in short term or long term bonds, securitised products, money market instruments or floating rate debt bonds. The main investing objectives of a debt fund will usually be preservation of capital and generation of income.
Quiz: Test your mutual fund gyaan
9. Which of this mutual fund investment is considered to be least risky?
Quiz: Test your mutual fund gyaan
10. What is systematic investment plan?
a) An investment programme designed to time the market.
b) A plan to prevent losses when markets are falling.
c) A plan whereby you invest fixed amount of money at regular intervals.
The correct answer is A plan whereby you invest fixed amount of money at regular intervals.
SIP is a vehicle offered by mutual funds to help you save regularly by investing fixed amount of money at regular intervals.
SIP is a vehicle offered by mutual funds to help you save regularly by investing fixed amount of money at regular intervals.
Quiz: Test your mutual fund gyaan
11. What is advantage of SIP?
a) You can time the markets.
b) Rupee cost averaging.
c) You avoid making losses.
The correct answer is Rupee cost averaging.
SIP is a vehicle offered by mutual funds to help you save regularly by investing fixed amount of money at regular intervals.
SIP is a vehicle offered by mutual funds to help you save regularly by investing fixed amount of money at regular intervals.
Quiz: Test your mutual fund gyaan
12. What is an ETF?
a) Electronically transferred funds.
b) Exchange transfer funds.
c) Exchange traded funds.
The correct answer is Exchange traded funds.
It is a hybrid product having the features of both a mutual fund and stock. ETF is an index fund which is listed on the stock exchange and can be traded like any other security. ETF prices are real time and known at the time of transaction unlike NAV of other type of funds, which is computed at the end of business day.
It is a hybrid product having the features of both a mutual fund and stock. ETF is an index fund which is listed on the stock exchange and can be traded like any other security. ETF prices are real time and known at the time of transaction unlike NAV of other type of funds, which is computed at the end of business day.
Quiz: Test your mutual fund gyaan
13. ETF units bought at the stock markets are allocated through?
a) Statement of account.
b) Issue of unit certificates.
c) Credit to demat account.
The correct answer is Credit to demat account.
Since ETFs are traded on exchange just like shares the units bought are credited to your demat account just like shares of a particular company.
Since ETFs are traded on exchange just like shares the units bought are credited to your demat account just like shares of a particular company.
Quiz: Test your mutual fund gyaan
14. Can you invest in gold through mutual funds?
a) Yes.
b) No.
c) Can't say.
The correct answer is Yes.
You can invest in gold through gold ETFs where the underlying asset is gold.
You can invest in gold through gold ETFs where the underlying asset is gold.
Quiz: Test your mutual fund gyaan
15. How are gold ETFs treated for assessing tax?
a) Same tax treatment as physical gold.
b) Same tax treatment as non equity-oriented funds.
c) Same tax treatment as equity-oriented funds.
The correct answer is Same tax treatment as non equity-oriented funds.
Same tax treatment as debt funds where long term capital gain tax is for holding period of 1 year and above (physical gold is 3 years). No wealth tax is applicable on gold ETFs. Short-term capital gain tax is clubbed with your total income and taxed at applicable tax slab rates.
Same tax treatment as debt funds where long term capital gain tax is for holding period of 1 year and above (physical gold is 3 years). No wealth tax is applicable on gold ETFs. Short-term capital gain tax is clubbed with your total income and taxed at applicable tax slab rates.
Quiz: Test your mutual fund gyaan
16. FMPs are structured so that there is no?
a) Credit risk.
b) Mark-to-market risk.
c) Interest rate risk.
The correct answer is Interest rate risk.
Since investments in FMPs are locked it helps FMPs in beating interest rate risk.
Since investments in FMPs are locked it helps FMPs in beating interest rate risk.
Quiz: Test your mutual fund gyaan
17. If you are investing an amount of Rs 10,000 in a mutual fund but through a broker do you need to be KYC complaint?
a) Yes.
b) No.
c) Can't say.
The correct answer is Yes.
With effect from October 1, 2010 any investor investing through a distributor other than direct investment by the investor KYC compliance for any amount has become compulsory.
With effect from October 1, 2010 any investor investing through a distributor other than direct investment by the investor KYC compliance for any amount has become compulsory.
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