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NISM Series V-A
Mutual Fund Distributor · 2,000+ questions
NISM Series VII
Securities Operations
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Investment Adviser Level 1
IC-38 Insurance
Insurance Agent Certification
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Sample Test 3
Chapters 9–12 · Services, Risk & Scheme Selection
Question 1 of 20
Chapter 10 - Risk, Return and Performance of Funds
What is the 'dilution effect' in mutual funds related to AUM growth?
A
Dilution of investor ownership when new units are issued
B
As a fund's AUM grows, it becomes harder to maintain the same level of outperformance because larger orders have higher impact costs and the universe of investable stocks shrinks
C
Dilution of the TER when AUM increases
D
The dilution of the fund manager's attention as they manage more schemes
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