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A Liquid Fund invests only in debt and money market securities with a maximum residual maturity of
A{'text': '1 day', 'label': 'A'}
B{'text': '1 year', 'label': 'B'}
C{'text': '6 months', 'label': 'C'}
D{'text': '91 days', 'label': 'D'}
Answer & Solution
Correct answer: D. {'text': '91 days', 'label': 'D'}
1. Liquid Fund is a SEBI category of open-ended debt scheme.
2. Investments are restricted to debt and money market securities of up to 91 days maturity.
3. This tight ceiling on tenor keeps volatility low.
4. Overnight Funds sit even shorter, at 1 day maturity; Money Market Funds go up to 1 year.
_Source: NISM Series V-A: Mutual Fund Distributors Workbook (Dec 2019), Ch 2 "Concept and Role of a Mutual Fund", §2.2.4B(2)_
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