Multiple choice

Which of the following is NOT a characteristic of a mutual fund?

  1. Pooling of investments

  2. Market risk

  3. Uniform unit holder rights

  4. Safety of principal
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Mutual funds have three key characteristics: pooling of investments from many investors (A), market risk as investments are subject to market fluctuations (B), and uniform unit holder rights where all investors in the same scheme have equal rights (C). Safety of principal (D) is NOT a characteristic - mutual funds do NOT guarantee principal safety; they carry market risk and investors can lose capital.

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