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

Which statement about open-ended and close-ended schemes is correct?

Open-ended schemes allow investors to buy and redeem units on an ongoing basis at prices linked to NAV. Close-ended schemes have a fixed tenure and are typically exited through exchange trading or maturity, so the other statements reverse these features.

  1. AOpen-ended schemes have a fixed maturity and are listed on exchanges
  2. BClose-ended schemes allow investors to buy and redeem units at NAV at any time directly with the fund
  3. COpen-ended schemes offer continuous purchase and redemption at prices linked to NAVCorrect
  4. DClose-ended schemes have no fixed tenure and unlimited unit capital

Explanation

Open-ended schemes are available for subscription and redemption on an ongoing basis at NAV-linked prices. Close-ended schemes have a fixed tenure, and investors typically exit through exchange listing or on maturity. The other statements reverse these features.

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