Jul 18, 20222 min read

Mutual Funds Questions And Answers

Q1 Explain Briefly the NAV of a Mutual Fund scheme.

Answer:

NAV is the value of the fund’s assets minus its liabilities. SEBI rules require funds to calculate the NAV daily. To calculate the NAV per share, simply subtract the fund’s liabilities from its assets and then divide the result by the number of shares outstanding.

If the market value of a fund’s portfolio increases, after deduction of expenses and liabilities, then the value (NAV) of the fund and its shares increases. The higher NAV reflects the higher value of your investment.

NAV of a Mutual Fund are published on a daily basis in the newspapers and electronic media and play an important role in investor’s decision to enter or to exit. Analyst use the NAV to determine the yield on the schemes.

Where Net Assets of the scheme

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Q2What are the advantages and drawbacks of investing in a Mutual Fund?

Answer:

Advantages

Drawbacks

Q3 Explain Briefly what is Exchange Traded Funds.

Answer:

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features. ETFs are the most popular type of exchange-traded product.

ETFs offer public investors an undivided interest in a pool of securities and other assets and thus are similar in many ways to traditional mutual funds, except that shares in an ETF can be bought and sold throughout the day like stocks on a securities exchange through a broker-dealer.

Advantages of ETFs are the following:

· Buy and sell just like shares

· Buy and sell at real time prices

· One can put limit orders

· Delivery in your De-mat account

· Minimum trading lot is just one unit