Q. With reference to the Arbitrage funds, consider the following statements:
1.They are hybrid mutual funds that aim to earn returns by buying a stock at a lower price in one market and selling it at a higher price in another market at nearly the same time.
2.They are treated as equity-oriented funds because of the required equity exposure.
Which of the statements given above is/are correct?
Answer: C
Notes:
Explanation: Both are correct
Statement 1 is correct: Arbitrage funds are hybrid mutual funds that aim to earn returns by buying a stock at a lower price in one market and selling it at a higher price in another market at nearly the same time.
Statement 2 is correct: The Securities and Exchange Board of India (SEBI) classifies arbitrage funds as equity-oriented funds and requires them to maintain at least 65 percent gross exposure to equities or equity-related securities. They are treated as equity-oriented funds because of the required equity exposure.
Source: Business Line
