Mutual Fund,Venture Capital,Life Insurance Policies and AIFS MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Mutual Fund,Venture Capital,Life Insurance Policies and AIFS, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Mutual Fund,Venture Capital,Life Insurance Policies and AIFS MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Mutual Fund,Venture Capital,Life Insurance Policies and AIFS mcq questions that explore various aspects of Mutual Fund,Venture Capital,Life Insurance Policies and AIFS problems. Each MCQ is crafted to challenge your understanding of Mutual Fund,Venture Capital,Life Insurance Policies and AIFS principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Mutual Fund,Venture Capital,Life Insurance Policies and AIFS MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

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So, are you ready to put your Mutual Fund,Venture Capital,Life Insurance Policies and AIFS knowledge to the test? Let's get started with our carefully curated MCQs!

Mutual Fund,Venture Capital,Life Insurance Policies and AIFS MCQs | Page 16 of 18

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Q151.
What option does a policyholder have when discontinuing a policy?

a.

Revive the policy with increased risk cover.

b.

Withdraw from the policy without any risk cover.

c.

Convert the policy to a paid-up policy.

d.

Surrender the policy without any charges.

Discuss
Answer: (b).Withdraw from the policy without any risk cover. Explanation:When discontinuing a policy, a policyholder shall be entitled to revive it or withdraw from it without any risk cover.
Q152.
What is one of the reasons why companies offer higher interest rates on their fixed deposits compared to bank fixed deposits?

a.

Companies have lower risk exposures.

b.

Companies want to attract more customers.

c.

Companies are legally required to offer higher rates.

d.

Companies compensate for higher risk by offering higher interest.

Discuss
Answer: (d).Companies compensate for higher risk by offering higher interest. Explanation:Companies with higher risk exposures try to reward investors for the extra risks by offering higher interest rates.
Q153.
What is the significance of a company's strong financial strength and goodwill in the context of fixed deposits?

a.

Companies with strong financial strength offer lower interest rates.

b.

Companies with strong financial strength may pay less interest.

c.

Companies with strong financial strength are more likely to disappear.

d.

Companies with strong financial strength are considered safe for fixed deposit investors.

Discuss
Answer: (b).Companies with strong financial strength may pay less interest. Explanation:Companies with strong financial strength may pay less interest, and the weaker ones are forced to offer a little more reward (interest) to compensate investors for the extra risks.
Q154.
What is solvency, and how does it relate to the safety of fixed deposits?

a.

Solvency is the capacity of a company to pay its debts, and greater solvency indicates a higher risk for investors.

b.

Solvency is the financial strength of a company, and greater solvency indicates a higher risk for investors.

c.

Solvency is the net worth of a company, and greater solvency indicates a lower risk for investors.

d.

Solvency is the financial capacity of a company to pay its debts, and greater solvency indicates a lower risk for investors.

Discuss
Answer: (d).Solvency is the financial capacity of a company to pay its debts, and greater solvency indicates a lower risk for investors. Explanation:Solvency is the financial capacity of a company to pay its debts, and greater solvency indicates a lower risk for investors.
Q155.
Why is due diligence important for investors considering company fixed deposits?

a.

Due diligence is unnecessary for company fixed deposits.

b.

Due diligence helps in identifying the risks associated with company deposits.

c.

Due diligence is only required for bank fixed deposits.

d.

Due diligence is not applicable to fixed maturity plans.

Discuss
Answer: (b).Due diligence helps in identifying the risks associated with company deposits. Explanation:Due diligence includes the analysis of past credentials of the company, its credit rating by credit rating agencies, and other factors to identify the risks associated with company deposits.
Q156.
What distinguishes bank deposits from company deposits in terms of guarantees?

a.

Bank deposits are guaranteed by companies.

b.

Both bank and company deposits are covered by guarantees.

c.

Bank deposits are guaranteed by the Deposit Insurance and Credit Guarantee Corporation, while company deposits are not.

d.

Company deposits are guaranteed by the Deposit Insurance and Credit Guarantee Corporation, while bank deposits are not.

Discuss
Answer: (c).Bank deposits are guaranteed by the Deposit Insurance and Credit Guarantee Corporation, while company deposits are not. Explanation:Bank deposits are covered by a guarantee from the Deposit Insurance and Credit Guarantee Corporation (DICGC) of India, while company deposits are not subject to any such guarantee.
Q157.
What is the main purpose of a mutual fund?

a.

To provide tax benefits to investors

b.

To act as a Special Purpose Vehicle (SPV)

c.

To pool resources by issuing units and investing in securities

d.

To form capital for organizations

Discuss
Answer: (c).To pool resources by issuing units and investing in securities Explanation:A mutual fund is a mechanism for pooling resources by issuing units to investors and investing funds in securities.
Q158.
What is the role of unit-holders in a mutual fund?

a.

They act as fund sponsors

b.

They manage the mutual fund investments

c.

They share the profits or losses and capital appreciation with the mutual funds

d.

They are responsible for the arm's length relationship

Discuss
Answer: (c).They share the profits or losses and capital appreciation with the mutual funds Explanation:Unit-holders in mutual funds share the profits or losses and capital appreciation realized by the mutual funds through various schemes.
Q159.
What risk factors are associated with mutual fund investments?

a.

Only market risks

b.

Only investment risks

c.

Both market risks and investment risks

d.

Only liquidity risk

Discuss
Answer: (c).Both market risks and investment risks Explanation:All mutual fund investments are subject to market risks and investment risks, including trade volumes, settlement risk, liquidity risk, default risk, and possible loss of capital.
Q160.
How have Indian mutual funds been organized?

a.

Through the Companies Act

b.

Through the Partnership Act

c.

Through the Indian Trust Act

d.

Through the Securities and Exchange Board of India (SEBI)

Discuss
Answer: (c).Through the Indian Trust Act Explanation:Indian mutual funds have been organized through the Indian Trust Act, under which they have enjoyed certain tax benefits.
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