n NISM Certifications
V-A NISM Series V-A
Medium

Identify which among the following is the first step in the sequence of creating a mutual fund product?

Practice question from NISM Series V A - Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Launching the New Fund Offer (NFO)

  2. B

    Filing of Scheme Information Document (SID) with SEBI for observation

  3. C

    Launch of advertising and public relations campaigns by AMC

  4. Approval of Trustees and AMC board for the new product and drafting of SID

    Correct answer

Why this is the answer

Units in a mutual fund scheme are offered to investors for the first time by a New Fund Offer (NFO). The following are a few key steps leading to the NFO: AMC decides on a scheme to take to the market. This is decided on the basis of inputs from the Chief Investment Officer (CIO) and the Chief Marketing Officer (CMO). AMC prepares the Scheme Information Document (SID) for the NFO. This needs to be approved by the Trustees and the Board of Directors (BoD) of the AMC. The documents are then filed with SEBI. The AMC decides on a suitable timetable for the issue, launches its advertising and public relations campaigns, etc. The Scheme Documents and Application Forms are distributed to market intermediaries, and circulated in the market so that investors can apply in the NFO.

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