What type of mutual fund is an Overnight Fund classified as by the Securities and Exchange Board of India?

Closed-ended equity scheme Open-ended debt scheme Exchange-traded fund Index fund

What is the primary purpose of an Overnight Fund?

To provide long-term capital appreciation To hedge against inflation To offer a high-risk, high-reward investment To optimize the use of idle cash reserves

What is the typical maturity period for an Overnight Fund?

One week One month One year One day

How does the short investment horizon of an Overnight Fund impact its risk profile?

Increases the risk due to market volatility Minimizes risk due to limited exposure time Has no impact on the risk level Makes the risk unpredictable

What is the tax rate applied to long-term capital gains from an Overnight Fund with indexation?

10% 15% 20% 25%

Which of the following is NOT a major advantage of an Overnight Fund?

High potential for capital growth Better utilization of idle funds Low-risk factor Ease of liquidity

How does an Overnight Fund mitigate the impact of interest rate fluctuations?

By investing in long-term bonds Through its short investment horizon By hedging against interest rate swaps By diversifying across multiple asset classes

What is the key takeaway for investors regarding Overnight Funds?

They are a high-risk investment suitable for experienced traders They offer guaranteed returns regardless of market conditions They are a suitable option for long-term investment goals Understanding the risk-reward dynamics is crucial for informed investment decisions