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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund

In a mutual fund unit holder's account, what does the number of units held by an investor represent?

Units held by an investor represent proportionate ownership in the scheme's portfolio of securities. Each unit is an equal undivided share of the scheme's assets and liabilities, so the investor shares in gains and losses without any assured return or loan relationship.

  1. AA fixed rupee return promised by the AMC on the amount invested
  2. BThe investor's proportionate ownership in the scheme's portfolioCorrect
  3. CA loan given by the investor to the sponsor of the fund
  4. DThe investor's voting rights in the AMC's board

Explanation

A mutual fund pools money and issues units, and each unit represents an equal proportionate undivided share in the scheme's assets and liabilities. Units do not carry any assured return, are not a loan to the sponsor and give no board voting rights in the AMC.

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