NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Scheme Related Information
Which of the following is a feature of a Fixed Maturity Plan (FMP) in India?
A Fixed Maturity Plan is a close-ended debt scheme that invests in securities maturing close to or before the scheme's maturity date, typically holding them till maturity. This reduces interest rate risk, but returns are only indicative and are not guaranteed by the AMC.
- AIt is an open-ended debt scheme with daily sale and redemption
- BIt is a close-ended debt scheme that invests in instruments maturing on or before the scheme's maturity, aiming to hold them to maturityCorrect
- CIt invests mainly in equity shares of companies with fixed dividends
- DIt guarantees a fixed return assured by the AMC
Explanation
An FMP is a close-ended debt scheme whose portfolio is generally aligned to mature around the scheme's maturity, so the fund can hold to maturity and reduce interest rate risk. Returns are indicative and not guaranteed by the AMC, and units are not redeemable daily with the fund.
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