Class 12 Finance Important Chapter 16 Mutual Fund

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

Class 12 Finance Important Chapter 16 Mutual Fund

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Mutual Fund

Chapter: 16

IMPORTANT QUESTION AND ANSWER

Short Questions and Answers: 

1. What is a mutual fund?

Ans: A mutual fund is a collective investment scheme that pools money from numerous small investors and invests it in securities like shares and debentures. It is managed by professionals, and each investor owns units whose value depends on the value of the underlying assets.

2. What does NAV stand for in mutual funds?

Ans: NAV means Net Asset Value. It is calculated by subtracting the liabilities of the mutual fund from its total assets and dividing by the number of outstanding units. NAV represents the per-unit market value of the fund.

3. What are the two main types of mutual funds based on operation?

Ans: Mutual funds are classified as open-ended and closed-ended funds based on operation. Open-ended funds allow investors to buy and sell units at any time, while closed-ended funds have a fixed corpus and duration.

4. What is a Systematic Investment Plan (SIP)?

Ans: SIP is a facility offered by mutual funds where investors invest a fixed amount regularly at specified intervals. This method encourages disciplined saving and allows investors to accumulate wealth over time.

5. Who manages the pooled funds in mutual funds?

Ans: The pooled funds in a mutual fund are managed by an Asset Management Company (AMC), which is run by professional fund managers with expertise in investment management.

6. What is a balanced mutual fund?

Ans: A balanced mutual fund is a type of scheme that invests in both equities and fixed-income securities like debentures, providing both growth and regular income with moderate risk.

7. Why is diversification considered a benefit of mutual funds?

Ans: Diversification spreads investments across various sectors and securities, reducing the risk for investors. This ensures that poor performance in one investment does not significantly impact the overall returns.

8. How do open-ended funds differ from closed-ended funds regarding liquidity?

Ans: Open-ended funds offer high liquidity as investors can buy and redeem units at any time. Closed-ended funds are less liquid because units can only be redeemed after the maturity period or sold on a stock exchange.

9. What is a money market mutual fund?

Ans: A money market mutual fund invests primarily in short-term money market instruments like treasury bills, certificates of deposit, and commercial papers, offering high liquidity and low risk.

10. What tax benefit do some mutual funds offer?

Ans: Certain mutual funds, like equity-linked savings schemes (ELSS), provide tax deductions under Section 80C of the Income Tax Act, allowing investors to save tax while investing.

Fill in the Blanks:

1. A mutual fund is a collective investment created through mutual contributions made by a large number of small __________.

Ans: Savers.

2. The price of each unit in a mutual fund is governed by the value of the underlying __________.

Ans: Investments.

3. The most popular term used in mutual funds to explain per-unit value is __________.

Ans: Net Asset Value (NAV).

4. In a mutual fund, the contributions of investors are divided into equal portions called __________.

Ans: Units.

5. The initial offer price of each unit in most mutual funds is basically Rs. __________.

Ans: 10.