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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal and Regulatory Framework

Which statement about the sponsor of a mutual fund under SEBI regulations is correct?

The sponsor is the entity that sets up the mutual fund and must satisfy SEBI conditions such as an adequate track record in financial services and a positive net worth. It does not manage investments, hold securities, or get chosen by unitholders.

  1. AThe sponsor manages the daily investment decisions of every scheme
  2. BThe sponsor is the person who establishes the fund and must meet track record and net worth normsCorrect
  3. CThe sponsor acts as the custodian of the scheme's securities
  4. DThe sponsor is appointed by the unitholders at the annual meeting

Explanation

The sponsor establishes the mutual fund and must satisfy eligibility conditions such as a track record in financial services and positive net worth. It appoints trustees and the AMC under SEBI approval. It does not act as custodian or get appointed by unitholders.

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