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The legal form under which a mutual fund is set up in India is a
A{'text': 'Trust', 'label': 'A'}
B{'text': 'Partnership firm', 'label': 'B'}
C{'text': 'Company', 'label': 'C'}
D{'text': 'Cooperative society', 'label': 'D'}
Answer & Solution
Correct answer: A. {'text': 'Trust', 'label': 'A'}
1. SEBI (MF) Regulations, 1996 define a mutual fund as a fund established in the form of a trust.
2. The trust raises money by selling units to the public under one or more schemes.
3. The pooled money is invested in securities in line with a stated objective.
4. A partnership firm, company or cooperative society are not permitted legal forms for an Indian mutual fund.
_Source: NISM Series V-A: Mutual Fund Distributors Workbook (Dec 2019), Ch 2 "Concept and Role of a Mutual Fund", §2.1_
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