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Introduction to Financial Markets (405) — CBSE Class 10 board question

Q1. [1] § What are the different types of Mutual funds?
______ are specialised form of mutual funds that invest in extremely short-term fixed income instruments.
  1. (a) Liquid Funds
  2. (b) Public Provident Funds
  3. (c) Growth Funds
  4. (d) Debts Funds
Previously asked in CBSE board exam
2023 92 Q3 (i)
Generated by claude-sonnet-4-6 · 2026-06-15 07:08 · grounding rag
Model Answer

(a) Liquid Funds

Liquid Funds are specialised forms of mutual funds that invest in extremely short-term fixed income/money market instruments and provide easy liquidity.

Source: Chapter 7, Types of Mutual Funds

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Explanation

The passage clearly states that Liquid Funds/Money Market Funds "invest in highly liquid money market instruments" with investment periods "as short as a day." Debt/Income Funds invest in fixed-income instruments but are medium-to-long-term, not extremely short-term — a common distractor. PPF is not a mutual fund at all. Always link "extremely short-term" to Liquid Funds in MCQs.

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