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

Which statement about the difference between an open-ended and a close-ended scheme is correct?

Open-ended schemes have no fixed maturity, and investors can buy or redeem units at NAV on an ongoing basis, so unit capital varies. Close-ended schemes have a fixed tenure and are exited through exchange listing or at maturity.

  1. AOpen-ended schemes have a fixed maturity and cannot accept fresh subscriptions after the NFO
  2. BClose-ended schemes allow purchase and redemption at NAV at any time directly with the fund
  3. COpen-ended schemes have no fixed maturity and units can be bought or sold at NAV on an ongoing basisCorrect
  4. DClose-ended schemes have unlimited unit capital that varies daily

Explanation

Open-ended schemes have no fixed term and offer continuous sale and repurchase at NAV-related prices, so unit capital changes. Close-ended schemes have a fixed tenure, and investors exit through stock exchange listing or maturity. The other options reverse these features.

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