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

Mr. Iyer, aged 40, wants to compare a 15-year PPF account with a 15-year equity index fund SIP for a long-term goal. Which statement correctly contrasts the two?

PPF gives a government-notified interest rate with sovereign backing, whereas an equity index fund SIP delivers market-linked, non-assured returns. The long horizon does not make equity returns guaranteed, and PPF, not the index fund, carries the 15-year lock-in.

  1. APPF returns are market-linked and the SIP return is declared by the government
  2. BPPF offers government-set interest and sovereign backing, while the index fund return is market-linked and not assuredCorrect
  3. CBoth offer assured returns because both have 15-year horizons
  4. DThe index fund has a lock-in of 15 years while PPF has none

Explanation

PPF interest is notified by the government and it carries sovereign backing. An index fund return depends on market performance and is not assured. PPF has the 15-year tenure, not the index fund.

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