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Role of Mutual Funds, Indian Financial system Video Lecture | Indian Financial System - B Com
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FAQs on Role of Mutual Funds, Indian Financial system Video Lecture - Indian Financial System - B Com
| 1. What is the role of mutual funds in the Indian financial system? |  |
Ans. Mutual funds play a significant role in the Indian financial system by pooling money from multiple investors and investing it in a diversified portfolio of securities. They provide an opportunity for small investors to access professional fund management and benefit from economies of scale. Mutual funds also contribute to the development of the capital market by channeling funds into various sectors of the economy.
| 2. How do mutual funds work in the Indian financial system? | |
Ans. Mutual funds in the Indian financial system work by collecting money from investors and investing it in a diversified portfolio of securities such as stocks, bonds, and money market instruments. The fund's performance is based on the performance of the underlying securities. Investors can buy units of the mutual fund scheme, and the value of these units is determined by the net asset value (NAV) of the fund, which is calculated daily.
| 3. What are the advantages of investing in mutual funds in the Indian financial system? | |
Ans. Investing in mutual funds in the Indian financial system offers several advantages. Firstly, it provides diversification as the funds are invested in a variety of securities, reducing the risk of loss. Secondly, mutual funds are managed by professionals who have expertise in selecting and managing investments. Thirdly, mutual funds offer liquidity, allowing investors to buy or sell units at any time. Lastly, mutual funds provide transparency and regular reporting, enabling investors to track their investments.
| 4. How can an individual invest in mutual funds in the Indian financial system? | |
Ans. Individuals can invest in mutual funds in the Indian financial system by following a simple process. They need to open an account with a mutual fund house or through a registered distributor. The investor can then select a mutual fund scheme based on their investment objective and risk appetite. The investment can be made through a lump sum or systematic investment plan (SIP). The required documents and KYC (Know Your Customer) process need to be completed as per regulatory requirements.
| 5. What are the risks associated with investing in mutual funds in the Indian financial system? | |
Ans. While mutual funds offer various benefits, there are certain risks associated with investing in them in the Indian financial system. Market risk is one such risk, where the value of investments can fluctuate based on market conditions. Credit risk is another risk, where the issuer of the underlying securities defaults on payment. Additionally, there are risks associated with the performance of the fund manager, interest rate changes, and liquidity risk. Investors should carefully assess these risks before investing in mutual funds.
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Nov 16, 2024 Last updated |
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