NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Scheme Related Information
A mutual fund's overnight scheme and a liquid scheme are compared. Which statement is correct as per SEBI's categorisation?
Overnight funds invest in overnight securities with a residual maturity of one day, whereas liquid funds invest in debt and money market securities with maturity of up to 91 days. The other options either swap these definitions or state maturities that do not apply.
- AOvernight funds invest in securities with residual maturity of 1 day, while liquid funds invest in debt and money market securities with maturity up to 91 daysCorrect
- BOvernight funds invest in securities up to 91 days, while liquid funds invest in 1-day securities
- CBoth invest only in securities with maturity up to 365 days
- DOvernight funds invest in government securities of 10-year maturity
Explanation
SEBI defines an Overnight Fund as investing in overnight securities having residual maturity of 1 day, and a Liquid Fund as investing in debt and money market securities with maturity up to 91 days. The reversed option swaps the two definitions, which is the key error.
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