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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal and Regulatory Framework

Under SEBI regulations, which of the following is permitted as an investment or activity for a mutual fund?

A mutual fund may invest in securities consistent with the scheme's stated investment objective and within SEBI's prescribed limits. Lending to investors and unlimited associate investments are not allowed, and underwriting is permitted only under specified conditions rather than freely.

  1. ALending or advancing money to investors in its schemes
  2. BInvesting in unlisted securities of the sponsor's associate companies without limits
  3. CInvesting in securities in accordance with the investment objective stated in the scheme's offer document and within prescribed limitsCorrect
  4. DUnderwriting a public issue using unit holders' funds without any conditions

Explanation

A scheme must invest within the investment objective and regulatory limits. Lending money to investors and unrestricted associate investments are prohibited, and underwriting is allowed only under specified conditions, not without any.

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