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Indian Economy Quiz: Mutual Funds and Investment Products

  • 11 questions
  • 11 minutes
  • Difficulty: Medium
Useful for:SSC CGLBankingIBPSSBIRBINABARDUPSC Civil ServicesState Exams
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About this quiz

This Indian Economy quiz on Mutual Funds and Investment Products puts 11 multiple-choice questions to you, the verified MCQs published with GK24's note on the topic, 1 of them asked in real previous-year papers. Every question carries a full explanation of why the correct option is right and why the other options are wrong, so you learn the fact behind the answer rather than the letter. Attempt it right after reading the note, keep to the timer, and use the explanations at the end to mark what needs another look. Sit it again before the exam as a quick revision of the topic.

Questions in this quiz

11 questions with answers and explanations

Q1.Indian EconomyAsked in: Uttar Pradesh · UPPSC GIC Lecturer Economics 2021Easy

Mutual Funds are regulated in India by which of the following institutions?

  1. A.RBI
  2. B.SEBI
  3. C.BSE
  4. D.NSE
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Correct answer: B. SEBI

Mutual funds in India are registered with and regulated by the Securities and Exchange Board of India under the SEBI (Mutual Funds) Regulations, 1996, which lay down the three-tier structure of sponsor, trustees and asset management company, the scheme categories, the cap on the expense ratio and the disclosures a…

Q2.Indian EconomyMedium

The net asset value (NAV) of a mutual fund scheme is calculated as:

  1. A.Total assets of the scheme divided by its total liabilities
  2. B.Market value of assets minus liabilities, divided by the number of units outstanding
  3. C.Total income of the scheme divided by the number of investors
  4. D.Face value of a unit plus the exit load
Show answer
Correct answer: B. Market value of assets minus liabilities, divided by the number of units outstanding

The NAV is the per unit book value of a scheme: take the market value of all the securities and cash the scheme holds, subtract its liabilities and accrued expenses, and divide by the number of units outstanding.

Q3.Indian EconomyMedium

Which was the first mutual fund organisation in India, set up in 1963 by an Act of Parliament?

  1. A.SBI Mutual Fund
  2. B.Unit Trust of India
  3. C.Life Insurance Corporation of India
  4. D.Industrial Development Bank of India
Show answer
Correct answer: B. Unit Trust of India

The Unit Trust of India was established in 1963 by an Act of Parliament and launched its first scheme, Unit Scheme 1964 or US-64, in the following year; it held a monopoly of the business until 1987.

Q4.Indian EconomyMedium

In the three-tier structure of an Indian mutual fund, which entity actually manages the schemes and takes the investment decisions?

  1. A.The sponsor
  2. B.The trustees
  3. C.The asset management company
  4. D.The custodian
Show answer
Correct answer: C. The asset management company

The AMC is appointed by the trustees, is registered with SEBI and runs the schemes from day to day: it employs the fund managers, decides which securities to buy and sell, and is paid a management fee out of the scheme.

Q7.Indian EconomyEasy

The chief benefit of investing through a Systematic Investment Plan (SIP) is:

  1. A.A guaranteed return fixed in advance
  2. B.Rupee cost averaging over market cycles
  3. C.Exemption from the expense ratio
  4. D.Freedom from all market risk
Show answer
Correct answer: B. Rupee cost averaging over market cycles

In an SIP the same sum is invested at fixed intervals, so it automatically buys more units when the NAV is low and fewer when it is high; over a full market cycle the average cost per unit therefore works out lower than a lump sum invested at a high…

Q8.Indian EconomyEasy

The National Pension System (NPS) in India is regulated by:

  1. A.SEBI
  2. B.IRDAI
  3. C.PFRDA
  4. D.RBI
Show answer
Correct answer: C. PFRDA

The Pension Fund Regulatory and Development Authority, which was given statutory status by the PFRDA Act of 2013, regulates the National Pension System and the Atal Pension Yojana, appoints the pension fund managers and the central record keeping agency, and prescribes the Tier I and Tier II account structure.

Q9.Indian EconomyMedium

An open-ended mutual fund scheme is one which:

  1. A.Has a fixed maturity date and is listed on a stock exchange
  2. B.Allows investors to enter and exit on any working day at the NAV
  3. C.Opens for transactions only at stated intervals
  4. D.Invests only in government securities
Show answer
Correct answer: B. Allows investors to enter and exit on any working day at the NAV

An open-ended scheme has no fixed maturity; the fund house keeps creating and cancelling units, so an investor may buy or redeem on any working day at the NAV declared for that day, which is why most schemes sold today are open-ended.

Q11.Indian EconomyHard

The Sukanya Samriddhi account for a girl child matures:

  1. A.Fifteen years from the date of opening
  2. B.Twenty-one years from the date of opening
  3. C.When the girl turns eighteen years of age
  4. D.After five years, like the National Savings Certificate
Show answer
Correct answer: B. Twenty-one years from the date of opening

The account is opened by a guardian in the name of a girl child before she completes ten years of age, deposits are made for the first fifteen years, and the account matures twenty-one years from the date it was opened; a part withdrawal is allowed for higher education after…

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