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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Comparison of Products Across Categories

Caselet: Mrs. Sethi, 58, a retiree, needs regular income, low volatility and capital safety, and has no tolerance for equity risk. Compare Senior Citizens' Savings Scheme (SCSS), a balanced advantage fund, and a small-cap fund. Which recommendation best fits her profile, and why is a typical mismatch wrong?

SCSS best suits Mrs. Sethi because it gives sovereign-backed, government-set interest paid quarterly, matching her need for income and capital safety. A small-cap fund is highly volatile and conflicts with her zero equity risk tolerance.

  1. ASmall-cap fund, because high long-term growth suits all retirees
  2. BBalanced advantage fund alone, because it guarantees a fixed quarterly payout
  3. CSCSS, because it offers sovereign-backed quarterly interest, while a small-cap fund's volatility conflicts with her need for safetyCorrect
  4. DSCSS, because its returns are market-linked and rise with equity indices

Explanation

SCSS pays government-set interest quarterly with sovereign backing, matching income and safety needs. Small-cap funds are highly volatile, and balanced advantage funds do not guarantee payouts. SCSS returns are not market-linked.

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