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Mutual Funds Interview Questions & Answers - Learning Mode
COOLINTERVIEW.COM INVESTMENT INTERVIEW QUESTIONS MUTUAL FUNDS INTERVIEW QUESTIONS QUESTIONS & ANSWERS - LEARNING MODE

Mutual Funds Interview Questions & Answers - Learning Mode

A mutual fund is a pool of money from numerous investors who wish to save or make money just like you. Investing in a mutual fund can be a lot easier than buying and selling individual stocks and bonds on your own. Investors can sell their shares when they want. A mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities.

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Subcategories for Mutual Funds Interview Questions & Answers - Learning Mode

Following are sub categories for which Interview Questions & Answers are available under Mutual Funds Interview Questions & Answers - Learning Mode. Please select the appropriate sub-category:-

Debt / Income Mutual Fund Interview Questions & Answers (3) Learning Mode | Exam Mode

Diversified / Balanced Mutual Fund Interview Questions & Answers (1) Learning Mode | Exam Mode

Equity / Growth Mutual Fund Interview Questions & Answers (1) Learning Mode | Exam Mode

Fund of Funds Interview Questions & Answers (1) Learning Mode | Exam Mode

Gilt Fund Interview Questions & Answers (2) Learning Mode | Exam Mode

Index Funds Interview Questions & Answers (1) Learning Mode | Exam Mode

Money Market / Liquid Mutual Fund Interview Questions & Answers (1) Learning Mode | Exam Mode

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Mutual Funds Interview Questions & Answers - Learning Mode
Try Mutual Funds Interview Questions & Answers - Exam Mode
Question: What are risks by investing funds in Mutual Funds?

Answer: Investments in stock market are risky as the value of our investments goes up or down with the change in prices of the stocks where we have invested. Therefore, the biggest risk for an investor in Mutual Funds is the market risk. However, different Schemes of Mutual Funds have different risk profile, for example, the Debt Schemes are far less risk than the equity funds. Similarly, Balance Funds are likely to be more risky than Debt Schemes, but less risky than the equity schemes. Source: CoolInterview.com
Question: Can non-resident Indians (NRIs) invest in mutual funds?

Answer: Yes, non-resident Indians can also invest in mutual funds. Necessary details in this respect are given in the offer documents of the schemes. Source: CoolInterview.com
Question: How significant are fund costs while choosing a scheme?

Answer: The cost of investing through a mutual fund is not insignificant and deserves due consideration, especially when it comes to fixed income funds. Management fees, annual expenses of the fund and sales loads can take away a significant portion of your returns. As a general rule, 1% towards management fees and 0.6% towards other annual expenses should be acceptable. Carefully examine the fee a fund charges for getting in and out of the fund. Again, you can query on entry and exit loads. Source: CoolInterview.com
Question: How are mutual funds regulated?

Answer: All Asset Management Companies (AMCs) are regulated by SEBI and/or the RBI (in case the AMC is promoted by a bank). In addition, every mutual fund has a board of directors that represents the unit holders interests in the mutual fund. Source: CoolInterview.com
Question: What are Offshore Funds?

Answer: Offshore funds specialise in investing in foreign companies or corporations. These funds have non-residential investors and are regulated by the provisions of the foreign countries where these are registered. These funds are regulated by RBI directives. Source: CoolInterview.com
Question: A well known fund manager has left the mutual fund I was invested in and the returns have dwindled as well. Should I stay put or exit?

Answer: Keep a watchful eye on the fund and its performance after the older fund manager left the fund. Track the fund for some time and allow the new fund manager to choose the desired path for the fund.

This will help you as an investor to understand the investment strategy adopted by the new fund manager in terms of stock selection, asset allocation and an overall investment cycle. Do not take a call in a knee jerk reaction or a routine bear cycle. Source: CoolInterview.com
Question: What is an Asset Management Company (AMC)?

Answer: The company that manages a mutual fund is called an AMC. For all practical purposes, it is an organized form of a money portfolio manager. An AMC may have several mutual fund schemes with similar or varied investment objectives. The AMC hires a professional money manager, who buys and sells securities in line with the fund's stated objective. Source: CoolInterview.com
Question: I am planning for a mutual fund SIP. Confused between choosing growth or dividend option. Suggestions please.

Answer: Both growth and dividend options have their place and the final selection depends on your investment plan. If you are looking for a long term investment and do not need any annual dividend payouts, the growth plan is a good way to compounding your investments. If you need income at various intervals of your investment period, opting for a dividend plan is ideal. Source: CoolInterview.com
Question: What is NAV? Define NAV?

Answer: NAV means Net Asset Value. The investments made by a Mutual Fund are marked to market on daily basis. In other words, we can say that current market value of such investments is calculated on daily basis. NAV is arrived at after deducting all liabilities (except unit capital) of the fund from the realizable value of all assets and dividing by number of units outstanding. Therefore, NAV on a particular day reflects the realisable value that the investor will get for each unit if the scheme is Source: CoolInterview.com
Question: What are various types of mutual funds, according to the periodicity of the pay outs?

Answer: Various kinds of Mutual Fund schemes as categorized according to the periodicity of the pay outs, are as follows:-
(a) Dividend Paying Schemes.
(b) Reinvestment Schemes.
Source: CoolInterview.com
Question: What is the process for changing address in the folio?

Answer: Change of Address process for:-
KYC Complied Folios/Investors:
In case of change of address for KYC complied (verified)folios, the investors shall be required to submit the below stated documents to the designated intermediaries of the KYC Registration Agency:
Proof of new address (POA) and,
Any other document the KYC Registration Agency may specify from time to time.

KYC not Complied Folios/Investors:
In case of change of address for KYC not complied(no Source: CoolInterview.com
Question: What are Interval Schemes?

Answer: Interval Schemes are those that combine the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices. Source: CoolInterview.com
Question: Why we should invest in mutual funds?

Answer: Investing in Mutual Funds is a very sensible option for the following reasons:-

Professional management of your investments
With a larger pool of resources, investors do not have to fulfill minimum investment requirement that they would have to in case of individual stocks
With a professional fund manager at the helm and a diversified portfolio in asset investment, one can be sure that the risks involved in such investments is periodically tracked to achieve aggressive f Source: CoolInterview.com
Question: Kindly suggest if arbitrage funds are ok for earning high returns with low risk.

Answer: Don't be under the wrong impression that arbitrage funds are equity funds, which will give you high returns and also protect your downside.

Arbitrage funds are a unique fund in the sense that:
As far as the risk profile and returns are concerned, they are like a debt fund i.e. low risk and low returns.
However, as far as the tax laws are concerned they are treated on par with equity funds and as such the long term capital gains tax is nil (however note that a few arbitrage funds Source: CoolInterview.com
Question: Do Mutual funds provide risk diversification?

Answer: Diversification of a portfolio is among the primary tenets of portfolio structuring and a necessary one to reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well qualified to apply the theories of portfolio structuring to our holdings and hence would be better off leaving that to a professional. Mutual funds represent one such option. Source: CoolInterview.com
Question: What are various types of mutual funds, according to type of investments?

Answer: Various kinds of Mutual Fund schemes as categorized according to the type of investments are as follows:-
(a) Equity funds / schemes
(b) Debt funds / schemes (also called Income Funds)
(c) Diversified funds / schemes (Also called Balanced Funds)
(d) Gilt funds / schemes
(e) Money market funds / schemes
(f) Sector specific funds
(g) Index funds Source: CoolInterview.com
Question: What are the different types of Mutual funds?

Answer: Equity Funds/ Growth Funds
Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over the medium to long-term. The returns in such funds are volatile since they are directly linked to the stock markets. They are best suited for investors who are seeking capital appreciation. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.

Diversified funds Source: CoolInterview.com
Question: What is a Mutual Fund?

Answer: A Mutual fund is an investment instrument where a large number of investors pool in their finances in a single trust. This trust is managed by a team of financial experts (known as Asset Management Company) who invest the accumulated capital in different financial assets like stocks, bonds and equities etc. All the people who invest in this fund share a common investment goal and the dividends earned from the investment is distributed in proportion to the capital invested. Source: CoolInterview.com
Question: What is the difference between an open-ended and close-ended scheme?

Answer: Open-ended schemes can issue and redeem units any time during the life of the scheme while close-ended schemes cannot issue new units except in case of bonus or rights issue. Hence, the number of units of an open-ended scheme can fluctuate on a daily basis while that is not the case for close-ended schemes. Another way of explaining this difference is that new investors can join the scheme by directly applying to the mutual fund at applicable net asset value related prices in case of open-ended Source: CoolInterview.com
Question: What mutual fund is suitable for you?

Answer: You should choose a mutual fund that meets your risk tolerance and your risk capacity levels (i.e. has similar investment objectives as your own). Typical investment objectives of mutual funds include fixed income or equity, general equity or sector-focused, high risk or low risk, blue-chips or turnarounds, long-term or short-term liquidity focus. You can use our Find-A-Fund query module to find funds whose investment objectives match yours. Source: CoolInterview.com

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