alleryStart learning →An open-ended mutual fund scheme is one in which
AInvestors can transact with the fund only during the NFO
BThe unit capital keeps changing as investors enter and exit
CThe fund is compulsorily listed on a stock exchange
DRedemptions are permitted only at maturity
Answer & Solution
Correct answer: B. The unit capital keeps changing as investors enter and exit
1. An open-ended scheme stays open for on-going subscription and redemption after the NFO.
2. Fresh subscriptions create new units, raising unit capital.
3. Redemptions cancel existing units, lowering unit capital.
4. The unit capital therefore fluctuates daily; the scheme has no fixed maturity.
_Source: NISM Series V-A: Mutual Fund Distributors Workbook (Dec 2019), Ch 2 "Concept and Role of a Mutual Fund", §2.2.1_
Keep practising Concept and Role of a Mutual Fund
Browse all Concept and Role of a Mutual Fund questions for AMFI Mutual Fund, or explore more Mutualfunds topics.
Related questions
An Index Fund or Exchange Traded Fund tracking a specified index must invest at leastWhich SEBI scheme category has a lock-in of 5 years or till retirement, whichever is earliAn Ultra-Short Duration Fund holds a portfolio with Macaulay duration betweenA Liquid Fund invests only in debt and money market securities with a maximum residual matAn Aggressive Hybrid Fund is required to invest in equity and equity related instruments iUnder SEBI categorisation, a Large Cap fund invests predominantly in stocks rankedAn Equity Linked Savings Scheme (ELSS) carries a mandatory lock-in period ofWhich of the following is a limitation of investing through mutual funds?