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Q1. What does SIP stand for?
A. Systematic Investment Plan
B. Simple Interest Plan
C. Secure Investment Policy
D. Standard Income Plan
Answer: A
Explanation: SIP stands for Systematic Investment Plan, which allows regular investment in mutual funds.
Q2. SIP is mainly used for investing in which option?
A. Fixed Deposits
B. Mutual Funds
C. Gold
D. Real Estate
Answer: B
Explanation: SIP is a method of investing regularly in mutual funds.
Q3. What is the main benefit of SIP?
A. High risk
B. Lump sum investment
C. Rupee cost averaging
D. No returns
Answer: C
Explanation: SIP helps in rupee cost averaging by investing regularly regardless of market conditions.
Q4. How often can you invest in SIP?
A. Daily
B. Weekly
C. Monthly
D. All of the above
Answer: D
Explanation: SIP investments can be made daily, weekly, or monthly depending on the plan.
Q5. SIP is suitable for which type of investors?
A. Beginners
B. Experts
C. Both A and B
D. None
Answer: C
Explanation: SIP is suitable for both beginners and experienced investors.
Q6. What is minimum amount required for SIP?
A. ₹10
B. ₹100
C. ₹500
D. ₹10,000
Answer: C
Explanation: Most mutual funds allow SIP starting from ₹500.
Q7. SIP helps to reduce which type of risk?
A. Credit risk
B. Market timing risk
C. Interest risk
D. Inflation risk
Answer: B
Explanation: SIP reduces the risk of wrong market timing by spreading investments.
Q8. Can SIP be stopped anytime?
A. Yes
B. No
C. Only after 1 year
D. Only after maturity
Answer: A
Explanation: SIPs are flexible and can be stopped anytime.
Q9. What is the ideal duration for SIP?
A. Short-term
B. Medium-term
C. Long-term
D. One day
Answer: C
Explanation: SIP works best when invested for long-term to gain compounding benefits.
Q10. What is compounding in SIP?
A. Loss calculation
B. Interest on interest
C. Tax deduction
D. Fixed return
Answer: B
Explanation: Compounding means earning returns on previously earned returns over time.
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