Class 12 Finance Chapter 16 Mutual Fund

Class 12 Finance Chapter 16 Mutual Fund Solutions English Medium As Per AHSEC New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 12 Finance Chapter 16 Mutual Fund Solutions in English and select need one. AHSEC Class 12 Finance Chapter 16 Mutual Fund Solutions Download PDF. HS 2nd Year Finance Textual Solutions.

Class 12 Finance Chapter 16 Mutual Fund

Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 12 Banking Question Answer are part of All Subject Solutions. Here we have given HS 2nd Year Finance Textual Solutions English Medium for All Chapters, You can practice these here.

Mutual Fund

Chapter: 16

Unit – 4: Financial Services

A. Very Short Answer Questions: 

1. Write the full form of SIP.

Ans: Systematic Investment Plan (SIP).

2. Write the first Mutual Fund institution of India.

Ans: Unit Trust of India (UTI).

3. In which year was the UTI established?

Ans: 1963.

4. Write the full form of NAV.

Ans: Net Asset Value (NAV).

B. Short Answer Questions: 

1. What is growth-oriented mutual fund?

Ans: A growth-oriented mutual fund is a fund that invests mainly in shares of companies with high growth potential to provide capital appreciation over the long term.

2. Explain stock mutual fund.

Ans: A stock mutual fund is a mutual fund that invests mainly in equity shares of different companies with the objective of earning higher returns through capital appreciation.

3. What is MMMF?

Ans: MMMF stands for Money Market Mutual Fund. It invests in short-term money market instruments and provides safety, liquidity, and stable returns.

4. Explain how NAV is calculated.

Ans: NAV (Net Asset Value) is calculated by using the following formula:

NAV = (Total Assets − Total Liabilities) ÷ Total Number of Units Outstanding.

5. What are the Units of mutual fund?

Ans: Units are equal portions of a mutual fund. When an investor invests money in a mutual fund, he/she is allotted units based on the fund’s NAV.

6. What are the various parties involved in Mutual fund?

Ans: The various parties involved in a mutual fund are:

(i) Sponsor.

(ii) Trustees.

(iii) Asset Management Company (AMC).

(iv) Custodian.

(v) Investors.

C. Long Answer Questions (Type-I):

1. Distinguish between Open-ended and Closed-ended Mutual Fund.

Ans: 

Basis of Difference	Open-ended Mutual Fund	Closed-ended Mutual Fund
(i) Nature	The scheme remains open for investment or sale of investment.	The scheme is closed for investment and sale of investment.
(ii) Size of Corpus	The size of the corpus is not fixed.	The maximum size of the fund is pre-fixed and cannot be exceeded.
(iii) Liquidity of Investment	The investment is highly liquid. Investors can sell their units at any time.	Not fully liquid. Investors generally have to remain invested until the lock-in period is over.
(iv) Listing in Stock Exchange	Units are not listed on the stock exchange.	Units are listed on the stock exchange.
(v) Purchase and Sale	Units are purchased and redeemed directly from the mutual fund.	Units are bought and sold through the stock exchange.

2. Write the benefits of investing in Mutual Funds.

Ans: (i) Professional management by experienced fund managers.

(ii) Diversification of investments reduces risk.

(iii) High liquidity, especially in open-ended schemes.

(iv) Small investments can be made through SIP.

(v) Offers better returns with convenience and transparency.

3. Explain various types of Mutual Fund on the basis of Operation or Execution.

Ans: On the basis of operation or execution, mutual funds are of two types:

Open-ended Mutual Fund:

(i) The scheme remains open for investment and redemption.

(ii) The size of the corpus is not fixed.

(iii) Investors can buy or sell units at any time.

(iv) Units are not listed on the stock exchange.

Closed-ended Mutual Fund:

(i) The scheme is open only for a fixed period.

(ii) The size of the corpus is fixed in advance.

(iii) Investors generally cannot redeem units before the maturity period.

(iv) Units are listed and traded on the stock exchange.

D. Long Answer Questions (Type-II): 

1. Explain various types of Mutual fund on the basis of Investment pattern. 

Ans: On the basis of investment pattern, mutual funds are classified into the following types:

(i) Growth-oriented Mutual Fund: These funds invest mainly in equity shares of companies with high growth potential. The main objective is capital appreciation over the long term.

(ii) Income Mutual Fund: These funds invest in fixed-income securities such as government securities, debentures, and bonds. Their main objective is to provide regular and stable income to investors.

(iii) Balanced Mutual Fund: These funds invest in both equity shares and debt securities. They aim to provide a balance between growth and regular income with moderate risk.

(iv) Stock Mutual Fund: These funds invest mainly in the shares of different companies. They offer the possibility of higher returns, but involve higher risk.

(v) Bond Mutual Fund: These funds invest mainly in bonds and other debt instruments. They provide regular income with relatively lower risk than equity funds.

(vi) Money Market Mutual Fund (MMMF): These funds invest in short-term money market instruments such as treasury bills, commercial papers, and certificates of deposit. They offer high liquidity, safety, and stable returns.