Explanation:

Explanation:

Explanation:

A retirement solution-oriented scheme with a lock-in period of 5 years or until the investor reaches the retirement age is referred to as a “Retirement Fund.” These funds are designed to help investors accumulate wealth for their retirement years. The lock-in period is in place to encourage a long-term investment horizon and disciplined savings for retirement.

The other options provided (Arbitrage Fund, Equity Savings, and Children’s Fund) represent different types of mutual fund schemes with distinct investment objectives, strategies, and target audiences.

Explanation:

An open-ended debt scheme investing in government securities across maturities is known as a “Dynamic Bond” fund. Dynamic Bond funds have flexibility in managing their portfolio duration and can invest in a mix of government securities with varying maturities based on the fund manager’s outlook on interest rates and market conditions. This flexibility allows the fund to adapt to changing interest rate scenarios and capitalize on potential opportunities in the bond market.

The other options provided (Credit Risk Fund, Corporate Bond Fund, and Gilt Fund) represent different types of debt funds with specific investment mandates, such as investing in corporate bonds, managing credit risk, or focusing exclusively on government securities (gilts).

Explanation:

The ratio of outstanding put options to outstanding call options is known as the Put-Call Ratio (PCR). It is a widely used financial indicator in options trading and analysis. The Put-Call Ratio helps investors and analysts assess market sentiment and potential future market movements.

A high Put-Call Ratio suggests that there are more outstanding put options relative to call options, indicating a potentially bearish sentiment, as investors may be purchasing more puts for downside protection. Conversely, a low Put-Call Ratio suggests a potentially bullish sentiment, as there are more outstanding call options relative to puts, indicating optimism about the market.

Explanation:

Merchant bankers do act as a single point of contact for issuers during a new issue of securities. Merchant bankers, also known as investment bankers, play a crucial role in the process of issuing new securities such as stocks or bonds. They assist the issuing company in various tasks, including the preparation of the offer documents, obtaining regulatory approvals, marketing the securities to potential investors, and ensuring compliance with securities laws. By acting as a single point of contact, merchant bankers streamline the communication and coordination between the issuer and the various entities involved in the issuance process, facilitating a smoother and more organized offering.

Explanation:

Preference shares have some features of equity and some of debt instruments. They are a type of hybrid security that combines characteristics of both equity and debt. Preference shareholders receive a fixed dividend, similar to bondholders receiving interest payments, which provides a debt-like feature. However, preference shareholders also have some equity-like features, such as voting rights and the potential for higher returns if the company performs well. This hybrid nature makes preference shares a unique financial instrument with elements of both equity and debt.

Explanation:

Explanation:

Without the services provided by intermediaries, it would be quite difficult for investors and issuers to locate each other and carry out transactions. Intermediaries play a crucial role in facilitating the smooth functioning of financial markets by acting as intermediaries between buyers and sellers. They provide services such as brokerage, market-making, and other financial services that help in connecting investors with issuers and enabling efficient and orderly transactions in the market.

Explanation:

Explanation:

The facility of purchasing units of a mutual fund by investing a pre-determined amount periodically is called a Systematic Investment Plan (SIP). In SIP, investors contribute a fixed amount at regular intervals (monthly or quarterly, for example) to buy units of the mutual fund. This systematic approach to investing helps investors benefit from rupee cost averaging and is a convenient way to enter the mutual fund market over time.

Explanation:

Explanation:

The draft prospectus in making a public issue is filed with the Securities and Exchange Board of India (SEBI). SEBI is the regulatory authority in India that oversees the securities market and ensures the protection of investors’ interests. Companies planning to make a public issue of securities, such as an initial public offering (IPO), are required to file a draft prospectus with SEBI for its approval before making the issue available to the public. SEBI reviews the prospectus to ensure that it complies with regulatory requirements and provides adequate information to investors.

Explanation:

In an offer for sale (OFS), the funds raised by the issue are the sale proceeds for the existing shareholders. In an OFS, existing shareholders, such as promoters or large investors, sell their shares directly to the public through the stock exchanges. The funds generated from the sale go to the selling shareholders rather than the company. This is a way for existing investors to monetize their holdings by selling shares to the public without the company issuing new shares or receiving the proceeds.

Explanation:

Though swap transactions are over-the-counter (OTC), they are governed by rules and regulations accepted by swap dealer associations. Swap dealer associations, or sometimes industry organizations, establish best practices and guidelines for participants in the over-the-counter derivatives market. These associations may set standards to ensure transparency, risk management, and fair practices in swap transactions. It’s important to note that regulatory oversight and compliance may also be applicable, depending on the jurisdiction and the nature of the swap transaction.

Explanation:

Explanation:

Mutual funds invest and manage investors’ money by selecting investments after evaluating their prospects, price, and performance. Mutual funds pool money from multiple investors to create a diversified portfolio of stocks, bonds, or other securities. Fund managers are responsible for making investment decisions on behalf of the investors, aiming to achieve the fund’s stated objectives. The selection process involves analyzing the potential of various securities, considering their prospects, pricing, and historical performance to make investment choices that align with the fund’s goals.

Explanation:

The promoter shall contribute by way of both equity shares and convertible securities. Promoters contribute to the initial capital of a company, and their contribution can be in the form of equity shares or convertible securities. Equity shares represent ownership in the company, while convertible securities, such as convertible debentures or preference shares, can be converted into equity shares at a later date. This dual option provides flexibility to the promoter in contributing to the company’s capital structure.

Explanation:

Explanation:

Explanation:

Explanation:

Explanation:

Explanation:

Explanation:

Explanation:

If the intrinsic value is perceived to be more than the market value, the scrip (stock) is said to be undervalued. Investors often consider the intrinsic value, which represents the true worth of the stock based on fundamental analysis, and compare it to the market value to identify potential investment opportunities.

Explanation:

Explanation:

Explanation:

shareholders can offer their shares for conversion into Depository Receipts (DRs) through various mechanisms including American Depository Receipts (ADR), Global Depository Receipts (GDR), and Indian Depository Receipts (IDR). So, the correct answer is d) All the above.

Explanation:

Explanation:

The returns to an equity investor are typically in the form of:

1. Dividend that may be periodically paid out.
2. Increase in the value of the investment in the secondary market.

Equity investors can receive income through dividends paid by the company, and they can also benefit from capital appreciation as the value of their investment in the secondary market increases over time. The other options (c) increase in the number of shares is not a common form of return for equity investors; instead, it may happen in certain corporate actions like stock splits or bonus issues.

Explanation:

Passive orders are orders that are lying unmatched in the order book. In the context of financial markets, passive orders are limit orders that specify a price at which a trader is willing to buy or sell a security. These orders are not immediately executed but instead wait in the order book until a matching counterparty is found. Passive orders reflect the trader’s willingness to wait for the market to come to their specified price rather than actively entering the market at the current best available price. This is in contrast to active (market) orders, which are orders to buy or sell a security at the best available price in the market.

Explanation:

After an order is placed on the system, it searches for a matching order. In the context of financial markets, when a trader submits an order to buy or sell a security, the system looks for a matching order that complements it. The matching order is one that has the opposite action (buy or sell) and, ideally, matches the specified price and quantity criteria of the original order.

The process of matching orders is crucial for the execution of trades on an exchange or trading platform, ensuring that buyers and sellers are matched efficiently based on their preferences and market conditions.

Explanation:

Explanation:

Explanation:

Explanation:

Explanation:

Explanation:

Interest rate options are available on government securities. Interest rate derivatives are financial instruments whose value is derived from the level of interest rates. Options, a type of interest rate derivative, give the holder the right (but not the obligation) to buy or sell a government security at a predetermined price (strike price) on or before the expiration date.

These options provide investors and institutions with a way to manage interest rate risk and speculate on future interest rate movements. Investors can use interest rate options to hedge against adverse interest rate movements or to take advantage of their expectations about the direction of interest rates.

Explanation:

Explanation:

Explanation:

A short sale refers to the selling of securities that are not owned by the client at the time of the sale. In a short sale, the seller borrows the securities from a third party (such as a broker or another investor) and sells them with the expectation that the price will fall. The seller then aims to buy back the same securities at a lower price to return them to the lender, making a profit from the difference between the selling price and the lower repurchase price.

Explanation:

The Government of India has set up the International Financial Services Centre (IFSC) to provide Indian companies access to global financial markets and promote development. IFSC is a designated area within a country that has special regulatory and tax regimes to attract financial services businesses and encourage international financial transactions. In India, the International Financial Services Centre Authority (IFSCA) is the regulator for IFSC activities.

IFSCs are intended to create a conducive environment for various financial services, including banking, insurance, capital markets, and other financial activities, to operate in a globally competitive manner. The establishment of IFSC aims to position India as a prominent international financial center and enhance the competitiveness of Indian businesses in the global financial landscape.

Explanation:

Explanation:

• Audited financial statements: These provide detailed information about a company’s financial position, performance, and cash flows. Key financial statements include the balance sheet, income statement, and cash flow statement.
• Industry reports: Analysts gather information about the industry in which a company operates to understand the broader economic and market trends that may impact the company’s performance.
• Government and regulatory publications: These sources include reports, filings, and disclosures mandated by regulatory bodies. For example, in India, the Securities and Exchange Board of India (SEBI) requires companies to make certain disclosures and submit regular reports.

By utilizing information from these diverse sources, analysts aim to build a comprehensive understanding of a company’s fundamentals and external factors that could influence its stock performance.

Explanation:

Explanation:

Equity capital does not have to be returned after a specified time. Equity represents ownership in a company, and shareholders provide capital to the company in exchange for ownership in the form of shares. Unlike debt capital, which involves borrowing money that must be repaid with interest over a specified period, equity capital is a more permanent form of financing.

While shareholders may expect a return on their investment through dividends or capital appreciation, there is no contractual obligation for the company to return the initial equity capital to shareholders. In the event of liquidation or sale of the company, shareholders may receive a portion of the remaining assets after all debts and obligations have been satisfied, but this is not a guaranteed return of the initial capital.

Explanation:

Actions taken by the Reserve Bank of India (RBI) in monetary, forex, and credit policies impact the interest rates and borrowing costs of banks, the government, and other issuers of debt securities. The RBI, as the central bank of India, plays a crucial role in formulating and implementing monetary policies that influence the overall economic environment.

The RBI regulates the money supply, interest rates, and liquidity in the financial system to achieve monetary policy objectives, which include controlling inflation, promoting economic growth, and maintaining financial stability. Through tools such as the repo rate, reverse repo rate, and open market operations, the RBI influences the cost of funds for banks and, consequently, affects interest rates in the broader economy. This, in turn, influences the borrowing costs for the government and other entities that issue debt securities.

Explanation:

Explanation:

Explanation:

in the context of Financial Technology (FinTech), applicants must inform their clients about the risks involved in testing the product. This ensures transparency and client awareness regarding potential financial, regulatory, and cybersecurity risks.

Explanation:

The statement refers to the process of dematerialization. Dematerialization is the conversion of physical securities (in the form of certificates) into electronic or digital form. When an issuer decides to issue securities in dematerialized form, they need to enter into an agreement with a depository. The depository holds these securities electronically in the demat account of the investors.

The other options mentioned are unrelated:

a) R-WAP (Registrar – Web enabled Application Portal) is a system for online registration and management of investor complaints with registrars.

b) Unified Payment Interface (UPI) is a payment system that enables instant money transfer between bank accounts through mobile devices.

c) Green Shoe Option (GSO) is an over-allotment option that allows underwriters to issue more shares than originally planned in an IPO

Explanation:

Investor evaluation forms another layer of scrutiny of the operations and performance of the company, apart from its auditors and regulators. Investors, whether institutional or individual, conduct evaluations and analyses of a company’s financial health, management practices, growth potential, and overall performance before making investment decisions. This scrutiny helps investors make informed choices and influences the market perception of a company’s value. While auditors and regulators play crucial roles in ensuring compliance and financial reporting accuracy, investor evaluations provide an additional perspective that can impact a company’s stock price and reputation.

Explanation:

he secondary market facilitates the trading of already issued securities among investors. Its primary function is to provide liquidity, which means allowing investors to buy and sell securities easily and quickly. When investors can readily buy or sell securities on the secondary market, it enhances market efficiency and ensures that investors can convert their investments into cash when needed. This liquidity is essential for maintaining investor confidence and attracting new investors to the market.

Explanation:

All constituents who are involved with an issue have to be registered with SEBI (Securities and Exchange Board of India) under the relevant regulations. SEBI is the regulatory authority in India that oversees and regulates the securities market, including the issuance and trading of securities. Registration with SEBI ensures compliance with regulatory requirements and helps maintain the integrity and transparency of the capital markets.

Explanation:

Explanation:

The foreign investor’s purchase and sale in the primary market are subject to the foreign exchange rules and regulations in force. These rules and regulations are enforced by the regulatory authorities overseeing foreign exchange transactions, and in the case of India, the Reserve Bank of India (RBI) plays a significant role in regulating and monitoring foreign exchange activities. Compliance with foreign exchange regulations is essential for foreign investors participating in the primary market to issue or acquire securities.

Explanation:

Explanation:

Issuers have to meet the eligibility norms and disclosure requirements laid down by SEBI (Securities and Exchange Board of India). SEBI is the regulatory authority in India that sets the guidelines and regulations for companies looking to issue securities in the market. Compliance with SEBI’s eligibility norms and disclosure requirements is crucial for ensuring transparency and investor protection in the securities market.

Explanation:

Based on the method used to determine the price, a public issue can be categorized as Fixed Price Issue (Option a) or Book Built Issue (Option b). In a fixed price issue, the offer price is predetermined and mentioned in the offer document. In a book-built issue, the price is discovered through a bidding process where investors bid at various prices, and the final issue price is determined based on the demand generated during the bidding period.

Explanation:

Explanation:

Explanation:

The custodian bank holds the funds as well as securities on behalf of the investors. Custodians play a crucial role in the financial markets by safeguarding and administering financial assets. They are responsible for holding and safeguarding a variety of financial instruments, including stocks, bonds, and other securities, on behalf of their clients, which can include individual investors, institutional investors, or financial institutions.

Registrar and transfer agents (R&T agents) typically handle administrative tasks related to mutual funds, such as maintaining records of investor transactions, processing redemptions, and updating investor account details. Asset Management Companies (AMCs) manage and operate mutual funds but do not hold the funds or securities directly. Authorized persons may refer to individuals or entities authorized by regulatory bodies to perform certain functions in the financial markets, but they may not necessarily hold funds or securities on behalf of investors.

Explanation:

Warrants are beneficial for a company when the exercise price (the price at which the warrant holder can buy the underlying security) is higher than the current share price. Warrants give the holder the right, but not the obligation, to buy a specific number of shares at a predetermined price before a specified expiration date.

When the exercise price of warrants is higher than the current share price, it means that the warrant holders will only exercise their warrants if the market price of the stock rises above the exercise price. In such a scenario, the company issuing the warrants receives a higher amount per share when the warrants are exercised, providing additional capital.

Options and futures are financial instruments similar to warrants but have different characteristics. Units, in a financial context, are a generic term and can refer to various financial instruments or investment vehicles, so it’s not specifically associated with the described scenario.

Explanation:

Explanation:

A debt instrument typically features future cash flows in the form of interest payments and the return of principal on maturity. Debt instruments represent loans or borrowed funds provided by investors to the issuer (such as governments, corporations, or other entities). In return for lending their money, investors receive periodic interest payments and, upon maturity, the repayment of the principal amount.

Debt instruments can take various forms, including bonds, promissory notes, and certificates of deposit. Investors in debt instruments are essentially creditors to the issuer, and the terms of the debt contract outline the interest rate, maturity date, and repayment terms. This contrasts with equity instruments, where investors become partial owners of the issuing entity and typically participate in profits through dividends and capital appreciation.

Explanation:

In a Book Built Issue, the company and its issue managers specify a price band within which investors can bid for the shares. This process is part of the price discovery mechanism in the capital markets. The price band consists of a floor price (the lower limit) and a cap or ceiling price (the upper limit). Investors can then bid for the shares within this specified price range.

Investors interested in participating in the issue submit their bids stating the quantity of shares they want to subscribe to and the price at which they are willing to purchase the shares. The final issue price is determined based on the demand generated at various price levels during the bidding process. This method allows for a more market-driven and dynamic determination of the issue price compared to a Fixed Price Issue, where the price is pre-determined by the issuer.

Explanation:

In the context of stock markets, the change in prices from one trade to another has to be at least 5 paisa or a multiple of 5 paisa. This minimum price movement is known as the “tick size” or “minimum tick.” Tick size represents the smallest price change that is allowed for a particular security during trading.

Tick sizes are established by stock exchanges and regulatory bodies to ensure orderly price movements and to prevent excessively small price changes, which could lead to unnecessary volatility or instability in the market. Therefore, securities on a stock exchange are traded in increments defined by the tick size, with 5 paisa being the minimum price movement in this case.

Explanation:

Explanation:

Mutual funds may impose a charge on investors at the time of exiting or redeeming units from a fund, and this charge is called the “exit load.” Exit load is a fee levied by the mutual fund to discourage investors from redeeming their units too soon after purchasing them. It is designed to align the interests of long-term investors with the fund’s objectives.

The exit load is usually a percentage of the redemption amount or may be a fixed amount. The idea is to encourage investors to stay invested for a certain period, which can benefit the fund by providing stability and allowing the fund manager to implement the investment strategy without constant inflows and outflows.

Investors should be aware of the exit load and other fees associated with a mutual fund before making investment decisions. Different funds may have varying exit load structures, so it’s important to review the fund’s offer document for specific details.

Explanation:

Explanation:

Explanation:

A Contra Fund is an open-ended equity scheme that follows a contrarian investment strategy. Contrarian investing involves taking positions in assets that are contrary to the prevailing market sentiment. In the context of a Contra Fund, the fund manager typically looks for opportunities in stocks that are currently out of favor with the market but have the potential for a turnaround or a change in sentiment.

The fund manager of a Contra Fund seeks to identify undervalued stocks that may be overlooked by other investors. This strategy involves going against the prevailing market trends and investing in assets that are temporarily undervalued. The goal is to benefit from the eventual correction in the market perception of these stocks.

It’s worth noting that investment strategies may vary among funds, and investors should carefully review the investment objectives and strategy of a specific fund before making investment decisions.

Explanation:

Explanation:

Registrar and transfer agents (R&T agents) facilitate investor services for most funds, including mutual funds. R&T agents play a crucial role in handling various administrative tasks related to investor transactions. They are responsible for maintaining records of investor accounts, processing subscription and redemption requests, updating changes in investor details, and ensuring the accurate and efficient transfer of units in mutual funds.

R&T agents act as intermediaries between the mutual fund and the investors, helping to streamline the administrative processes and enhance the overall investor experience. They play a key role in maintaining accurate records of investor holdings and transactions, ensuring that investors receive timely and accurate information about their investments.

Explanation:

An option that gives the buyer the right to buy the underlying asset at a specified price within a certain period is called a “Call option.” In a Call option, the buyer has the option, but not the obligation, to purchase the underlying asset from the option seller.

In a Call option:

• The buyer (holder) has the right to buy the asset.
• The seller (writer) has the obligation to sell the asset if the buyer decides to exercise the option.

Call options are commonly used by investors and traders to speculate on the upward price movement of the underlying asset or to hedge existing positions. They provide the buyer with the opportunity to benefit from potential price increases while limiting the risk to the premium paid for the option.

Explanation:

1. Ownership: When a company goes public by issuing shares to the public through an Initial Public Offering (IPO), ownership of the company becomes distributed among the public shareholders who purchase those shares. The original owners (founders or private investors) may still hold a portion of the company, but they share ownership with a larger group of public shareholders.
2. Management: The original owners and founders may not necessarily retain control over the day-to-day management of the company. Public companies typically have a board of directors and professional management teams responsible for making strategic decisions and managing operations. The board of directors is elected by the shareholders, and the management team is appointed to run the company.

Explanation:

Forwards are Over-the-Counter (OTC) derivatives, meaning they are traded directly between parties rather than through an exchange.

Explanation:

Explanation:

a) Risk-free income: Lenders of securities earn income in the form of fees or interest from lending their securities to borrowers. This income is often considered relatively low risk.

b) Protection of all rights: Even though the lender temporarily transfers the securities to the borrower, the lender retains ownership rights and continues to receive any corporate actions or benefits associated with the securities, such as dividends or voting rights.

c) Settlement guarantee: SLBM typically involves a well-regulated and standardized process, ensuring proper settlement and reducing counterparty risk. This settlement guarantee enhances the overall safety and efficiency of securities lending transactions.

Explanation:

Explanation:

When a security is traded on a cum-basis, it means that it incorporates the benefit of the corporate action in its price.

Explanation:

Commodities investment can be in the physical form (such as gold, silver, oil, etc.) but is generally in the form of financial products like commodity futures, options, exchange-traded funds (ETFs), or commodity-based mutual funds.

Explanation:

In a private placement, a company issues securities (such as shares or debentures) to a select group of investors rather than making a public offer to a large number of investors. The maximum limit of 50 persons, excluding qualified institutional buyers and employees, is set by the Companies Act to qualify as a private placement. Private placement is often used for raising capital from a specific group of investors without the need for a public offering and extensive regulatory disclosures.

Explanation:

Explanation:

While brokers primarily execute trades on behalf of clients, they may also engage in proprietary trading, where they use their own funds to buy or sell financial instruments for their own benefit. This is different from activities like underwriting, where the underwriter typically helps in the issuance and distribution of securities but may not engage in the same type of trading activities as a broker.

Explanation:

Funds Pay-in is the process of transferring funds to the clearing corporation to pay for purchase transactions. This ensures that buyers have the necessary funds available to settle their purchases.

Explanation:

A speculative trade in a derivative is not supported by an underlying position in cash but simply implements a view on the future prices of the underlying, at a lower cost. In speculative trading, investors or traders take positions in derivatives with the goal of profiting from anticipated price movements in the underlying asset.

Unlike hedging, which involves using derivatives to offset risks in an existing cash position, speculative trading is based on the expectation of price changes and is often undertaken to seek capital gains. Speculative trades can be leveraged, allowing traders to control a larger position with a smaller upfront investment, which is one of the reasons why they may be pursued for cost efficiency.

It’s important to note that speculative trading involves higher risks compared to hedging, as it relies on market predictions and price movements for potential profits.

Explanation:

Securities are financial instruments issued by companies, financial institutions, or the government to raise funds. Securities represent a form of ownership or a debt obligation, and they can be bought, sold, or traded in financial markets.

There are two main types of securities:

a) Equity Securities (Shares): These represent ownership in a company and are commonly known as stocks or shares. Shareholders have ownership rights in the company, including voting rights and a share of the company’s profits.

b) Debt Securities (Debentures, Bonds): These represent a debt obligation, where the issuer borrows money from investors. Debentures and bonds are examples of debt securities. Investors who purchase these securities are essentially lending money to the issuer in exchange for periodic interest payments and the return of the principal amount at maturity.

Explanation:

A zero coupon bond with a long maturity is issued at a very big discount to the face value. Unlike traditional bonds that pay periodic interest (coupon payments) to bondholders, zero coupon bonds do not make regular interest payments. Instead, they are issued at a significant discount to their face value, and the investor receives the face value at maturity.

The term “zero coupon” reflects the absence of periodic coupon payments. The discount at which the bond is issued represents the implied interest or yield to maturity. Investors purchasing zero coupon bonds gain from the difference between the purchase price and the face value when the bond matures.

These bonds are often used by investors for long-term financial planning, and the lack of regular interest payments can make them attractive for certain investment strategies.

Explanation:

Other highly traded derivatives in global markets cover a wide range of underlying assets, and they include derivatives for:

a) Currencies: Foreign exchange (Forex) derivatives involve currency pairs and are widely traded to manage currency risk or speculate on currency price movements.

b) Interest rates: Interest rate derivatives, such as interest rate swaps, futures, and options, are used to hedge against or speculate on changes in interest rates.

c) Commodities: Commodities derivatives include futures and options contracts based on commodities such as gold, silver, oil, agricultural products, and more. These derivatives are used for hedging and speculative purposes in the commodities markets.

The derivatives market plays a crucial role in providing risk management tools and opportunities for market participants to hedge against or profit from price movements in various financial instruments and commodities.

Explanation:

Business enterprises have a legal structure approved by law as suitable for raising money from the members of the public. The term “business enterprise” is broad and can include various forms of legal structures, such as sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.

In the context of raising money from the public, businesses often adopt legal structures that allow them to issue securities, such as shares or bonds, to investors. Public companies, which issue shares that are traded on stock exchanges, are a specific type of business enterprise that can raise capital from the public.

It’s important to note that while public companies are a subset of business enterprises that raise funds from the public through the sale of securities, not all business enterprises are publicly traded or have shares available for public investment. The legal structure chosen depends on various factors, including the nature of the business and its capital-raising requirements.

Explanation:

The Statement of Account (SoA) serves as the proof of the investment made by the investor in a mutual fund. It provides a detailed summary of the investor’s transactions and holdings in a particular mutual fund scheme.

When an investor makes an investment in a mutual fund, they receive a Statement of Account from the fund house. This document includes information such as the investor’s name, folio number, details of the investment made (such as the date of purchase, amount invested, and the number of units allotted), and any subsequent transactions.

Investors are advised to carefully review their Statement of Account to ensure the accuracy of the information and to keep track of their mutual fund investments. It is an essential document for monitoring investment activity and understanding the status of the investor’s holdings in the mutual fund scheme.

Explanation:

Mutual funds are institutional investors by objective, meaning their primary business is to invest in securities. Mutual funds pool money from individual and institutional investors to create a diversified portfolio of stocks, bonds, or other financial instruments. They are managed by professional fund managers who make investment decisions on behalf of the investors.

Investors in mutual funds purchase shares or units, which represent their proportional ownership in the fund’s portfolio. The mutual fund’s objective is typically stated in its prospectus and reflects the fund’s investment goals, strategies, and risk tolerance.

Mutual funds offer a way for investors to gain exposure to a diversified portfolio of securities without directly managing the investments themselves. The fund managers aim to achieve the fund’s objectives and generate returns for the investors.

Explanation:

Some derivative contracts are settled between counterparties on terms mutually agreed upon between them, and these are referred to as Over The Counter (OTC) derivatives. In OTC derivatives, the parties directly negotiate and customize the terms of the contract, including the underlying assets, notional amounts, contract duration, and settlement terms.

Unlike exchange-traded derivatives, which are standardized contracts traded on organized exchanges, OTC derivatives are private agreements directly between two parties. Common examples of OTC derivatives include customized swaps, forward contracts, and certain options contracts. The lack of standardization in OTC derivatives allows parties to tailor the terms to meet their specific risk management or investment needs. However, it also involves counterparty risk, as there is no central clearinghouse, and the terms are agreed upon bilaterally between the counterparties.

Explanation:

Explanation:

An over-the-counter (OTC) market refers to a decentralized market where trading of financial instruments, such as government securities, takes place directly between two parties without a centralized exchange or intermediary. Prior to 2005, the G-sec market in India primarily operated as an OTC market, where participants could buy and sell government securities directly with each other.

In 2005, the Reserve Bank of India (RBI) introduced a screen-based trading platform called the Negotiated Dealing System (NDS) to enhance transparency and efficiency in the trading of government securities. This initiative aimed to transition the G-sec market from an OTC model to a more organized and electronic trading platform, providing market participants with a centralized system for executing trades.

Explanation:

Risk management tools in the derivative market include:

a) Setting capital adequacy requirements for members: Establishing capital adequacy requirements ensures that members or participants in the derivative market have sufficient financial resources to cover potential losses. This helps enhance the financial stability of the market.

b) Imposing and maintaining stringent margin requirements: Margin requirements involve the deposit of a certain amount of funds or collateral by market participants to cover potential losses. By imposing and maintaining stringent margin requirements, exchanges and clearinghouses can mitigate the risk of default and ensure that participants have a financial stake in their trades.

c) Online monitoring of member positions: Continuous monitoring of member positions in real-time allows for prompt identification of potential risks or breaches of risk limits. Online monitoring helps in taking timely actions to address and manage risks before they escalate.

These risk management tools work together to maintain the integrity and stability of the derivative market, protecting both market participants and the overall financial system.

Explanation: