NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund
Which statement about open-ended and close-ended mutual fund schemes is correct?
Open-ended schemes allow investors to buy and redeem units on an ongoing basis at prices linked to NAV. They have no fixed maturity. Close-ended schemes, in contrast, have a fixed tenure and fixed unit capital, with exit usually through exchange listing or at maturity.
- AOpen-ended schemes allow purchase and redemption of units on an ongoing basis at NAV-based pricesCorrect
- BClose-ended schemes can be redeemed at any time directly with the fund at NAV
- COpen-ended schemes have a fixed maturity period
- DClose-ended schemes have an unlimited unit capital
Explanation
Open-ended schemes remain available for continuous sale and repurchase, with no fixed maturity. Close-ended schemes have a fixed tenure and fixed unit capital, and investors typically exit through stock exchange listing or at maturity.
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