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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Mutual Fund,Venture Capital,Life Insurance Policies and AIFS MCQs | Page 4 of 18

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Q31.
What is one of the advantages of mutual funds?

a.

Guaranteed rate of return

b.

Professional management

c.

Limited diversification

d.

High administrative costs

Discuss
Answer: (b).Professional management Explanation:One of the advantages of mutual funds is professional management, where investors benefit from the services of experienced and skilled managers.
Q32.
How does diversification benefit investors in mutual funds?

a.

It increases the risk of investments

b.

It reduces the financial risks of investments

c.

It guarantees a fixed return

d.

It limits the convenience of administration

Discuss
Answer: (b).It reduces the financial risks of investments Explanation:Diversification, a feature of mutual funds, reduces the financial risks of investments.
Q33.
What is an advantage of mutual funds in terms of administration?

a.

Increased administrative work for investors

b.

Time-consuming investment function

c.

Reduced administrative and paperwork for small investors

d.

Complex and inconvenient investment process

Discuss
Answer: (c).Reduced administrative and paperwork for small investors Explanation:Investing in a mutual fund reduces administrative and paperwork for small investors, making the investment function easy and convenient.
Q34.
What is an advantage of investing in mutual funds in terms of costs?

a.

High costs compared to direct investment in capital markets

b.

No transparency in costs

c.

Low costs compared to direct investment in capital markets

d.

Excessive paperwork costs

Discuss
Answer: (c).Low costs compared to direct investment in capital markets Explanation:Investing in mutual funds entails low costs compared to direct investment in capital markets.
Q35.
In open-ended schemes, when can investors get their money back?

a.

Only at maturity

b.

At the discretion of the fund manager

c.

At any time at the net asset value related prices

d.

Only during market hours

Discuss
Answer: (c).At any time at the net asset value related prices Explanation:In open-ended schemes, investors can get their money back at any time at the net asset value related prices from the mutual funds itself.
Q36.
How is the yearly return on a mutual fund calculated?

a.

Return percentage = (C + D) / (NAV₁ - NAV₀)

b.

Return percentage = (C - D) / (NAV₁ + NAV₀)

c.

Return percentage = (D + C + (NAV₁ - NAV₀)) / NAV₀

d.

Return percentage = (D - C - (NAV₁ - NAV₀)) / NAV₀

Discuss
Answer: (c).Return percentage = (D + C + (NAV₁ - NAV₀)) / NAV₀ Explanation:The formula for calculating the yearly return on a mutual fund is given by (D + C + (NAV₁ - NAV₀)) / NAV₀ , where D represents Dividend Received, C represents Capital Realized, NAV₁ is the Net Asset Value at the end of the year, and NAV₀ is the Net Asset Value at the beginning of the year.
Q37.
What does Sharpe's Ratio measure in the evaluation of mutual fund performance?

a.

Return premium to variability of returns

b.

Dividend received to capital realized

c.

Standard deviation of capital gains

d.

Risk-free rate of return

Discuss
Answer: (a).Return premium to variability of returns Explanation:Sharpe's Ratio measures the ratio of the risk premium to the variability of returns.
Q38.
Who developed Sharpe's Ratio?

a.

Warren Buffett

b.

William Sharpe

c.

Benjamin Graham

d.

Peter Lynch

Discuss
Answer: (b).William Sharpe Explanation:Sharpe's Ratio is named after Nobel laureate, US Economist William Sharpe, who developed it.
Q39.
What does a higher Sharpe's Ratio indicate in the context of mutual fund performance?

a.

Lower return for higher risk

b.

Better portfolio return relative to the degree of investment risk

c.

Lower variability of returns

d.

Negative return for lower risk

Discuss
Answer: (b).Better portfolio return relative to the degree of investment risk Explanation:A higher Sharpe's Ratio indicates better portfolio return relative to the degree of investment risk taken by the investor in a particular portfolio.
Q40.
What does a Sharpe's Ratio of 1 indicate?

a.

1 unit of return per unit of risk

b.

2 units of return per unit of risk

c.

Negative return

d.

No risk or return

Discuss
Answer: (a).1 unit of return per unit of risk Explanation:A Sharpe's Ratio of 1 indicates 1 unit of return per unit of risk.
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