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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Scheme Related Information

Which of the following best describes a Fixed Maturity Plan (FMP)?

A Fixed Maturity Plan is a close-ended debt scheme with a fixed tenure that invests in debt securities maturing in line with that tenure. Returns are indicative and not guaranteed, and units are usually bought only during the NFO.

  1. AAn open-ended debt scheme that allows purchase and redemption on any business day
  2. BA close-ended debt scheme that invests in instruments maturing in line with the scheme's tenureCorrect
  3. CAn equity scheme that must be held for three years with a lock-in
  4. DA scheme that pays a guaranteed return fixed by the AMC

Explanation

An FMP is a close-ended debt scheme with a fixed tenure, and it typically invests in debt instruments that mature on or before the scheme maturity so as to reduce interest rate risk. Returns are not guaranteed, so the last option is wrong. Open-ended liquidity does not apply to FMPs.

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