Skip to content

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

In the context of a mutual fund, what does the term 'pooling' of investors' money primarily allow a small investor to achieve?

Pooling lets a small investor gain access to a diversified portfolio of securities that would be expensive and difficult to build individually. Mutual funds offer no guaranteed returns or tax exemption, and investors own units of the scheme rather than the underlying securities directly.

  1. AGuaranteed returns equal to bank fixed deposits
  2. BAccess to a diversified portfolio that would be costly to build individuallyCorrect
  3. CExemption from all taxes on gains
  4. DDirect ownership of specific shares held by the fund

Explanation

A mutual fund collects money from many investors and invests it in a diversified portfolio of securities. A small investor could not easily build such a portfolio alone. Mutual funds do not guarantee returns, do not exempt gains from tax, and investors hold units, not the underlying shares directly.

Did you get it right without looking?

One question tells you little. A timed set on Concept and Role of a Mutual Fund shows your real accuracy, how long you take and where you lose marks.

Practise Concept and Role of a Mutual FundFree diagnostic mock

More Concept and Role of a Mutual Fund questions