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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund

Which of the following statements about an open-ended mutual fund scheme is correct?

An open-ended scheme allows investors to buy and redeem units on an ongoing basis at NAV-linked prices. It has no fixed maturity, so unit capital keeps changing. Exchange-only trading, fixed maturity redemption and fixed unit count describe closed-end schemes.

  1. AUnits can be bought and redeemed on an ongoing basis at prices linked to NAVCorrect
  2. BUnits can be sold only on a stock exchange at a market-determined discount
  3. CUnits can be redeemed only on the maturity date of the scheme
  4. DThe number of units is fixed after the New Fund Offer closes

Explanation

Open-ended schemes have no fixed maturity and are available for continuous subscription and redemption at NAV-related prices, so the unit capital changes. The other options describe closed-end features.

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