NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund
Which of the following is a feature of an open-ended mutual fund scheme as compared with a closed-ended scheme?
An open-ended scheme lets investors buy and redeem units on an ongoing basis at prices linked to NAV, so its unit capital keeps changing. Fixed maturity, fixed unit capital and redemption only at maturity are features of closed-ended schemes.
- AUnits can be bought and sold only during the New Fund Offer period
- BUnits are compulsorily listed and redeemed only on maturity
- CThe fund has a fixed maturity and a fixed number of units
- DInvestors can buy or redeem units at NAV-related prices on an ongoing basis, so the unit capital variesCorrect
Explanation
Open-ended schemes offer continuous purchase and redemption at NAV-linked prices, so the unit capital changes. Fixed maturity, a fixed unit count and redemption at maturity describe closed-ended schemes.
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