NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund
Which of the following is a key advantage that a mutual fund offers a small retail investor?
The key advantage is professional management and diversification even with a small investment. Pooling many investors' money lets a small investor hold a spread of securities managed by experts. Mutual funds do not guarantee returns or remove market risk, including in debt schemes.
- AA guaranteed minimum return on the invested amount
- BProfessional management and diversification with a small investment amountCorrect
- CFreedom from all market risk in debt schemes
- DFixed maturity value assured by the AMC
Explanation
Mutual funds pool small sums so investors get professional fund management and a diversified portfolio at low cost. Returns are not guaranteed, and market risk exists even in debt schemes. The AMC does not assure maturity values.
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