Mutual Fund Scheme Performance
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Questions and Answers

What is the purpose of defining a benchmark for mutual fund schemes?

  • To advertise the scheme to potential investors
  • To assess the performance of the scheme against a comparable standard (correct)
  • To manipulate the reported performance of the scheme
  • To create confusion about the scheme's performance
  • Who typically constructs most benchmarks for mutual fund schemes?

  • Government regulatory bodies
  • Independent auditing firms
  • Stock exchanges, credit rating agencies, securities research houses, or financial publications (correct)
  • Mutual fund managers
  • What are the requirements for a credible benchmark for mutual fund schemes?

  • It should be in line with the investment objective and strategy of the scheme (correct)
  • It should be calculated by the scheme manager
  • It should be determined by the scheme's competitors
  • It should be vague and undefined
  • Why is the choice of benchmark simplest for an index fund?

    <p>The investment objective clearly indicates the index that the scheme would track</p> Signup and view all the answers

    Who benefits from an appropriate performance benchmark for mutual fund schemes?

    <p>Unit-holders and potential investors</p> Signup and view all the answers

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