Mutual funds can be an effective way to save for important financial goals like retirement or children’s education. But with 37 fund houses offering over 500 funds, it can be difficult to select the ones that suit your specific requirement. Take this quiz to find if you can pick the right fund or need to educate yourself further.
1. While choosing a mutual fund, what is your main objective?
a) Long-term growth
d) All of the above
2. What is the best measure of a mutual fund’s performance?
c) Total return
3. How frequently is the NAV calculated?
4. Which is the best source of information on a mutual fund?
a) A good financial newspaper or magazine
b) Your financial adviser
c) The fund’s prospectus
d) The distributor who sold you the fund
5. What is the aim of an index fund?
a) Track the returns of a benchmark
b) Beat the returns of a benchmark
c) Buy stocks only in BSE 500
d) Invest in the best-performing sectors of the stock market
6. What does rupee cost averaging mean?
a) Investing a certain amount of money at regular intervals, regardless of the market conditions
b) The average cost to obtain a specific yield
c) The average cost of a specified dollar return on investment
7. What is net asset value?
a) The market value of a fund’s securities, minus expenses, divided by outstanding shares
b) The total value of securities in a fund
c) The present value of your total net holdings in a fund
8. What is the objective of a growth fund?
a) Capital appreciation
b) Value retention
c) Dividend payout
9. Is it true that there is an inverse relationship between risk and reward?
10. Is it true that in a no-load fund, the buying price is the same as the NAV?
Answers: 1. d; 2. c; 3. a; 4. c; 5. a; 6. a; 7. a; 8. a; 9. b; 10. a.
Over 8 correct: If you aren’t investing in MFs, start now
5-7 correct: Read more on MFs before you start investing.
Less than 5: You need to read Money Today more often!
Evaluating a fund
Here are some important factors you should consider before investing in a mutual fund.
Fund manager’s tenure
Costs to watch out for
Parameters to compare funds
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