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    Question

    What is the main purpose of SEBI allowing mutual funds to sell credit default swaps (CDS)?

    A To improve investor awareness Correct Answer Incorrect Answer
    B To increase flexibility in risk management Correct Answer Incorrect Answer
    C To decrease market liquidity Correct Answer Incorrect Answer
    D To limit speculative trading Correct Answer Incorrect Answer
    E To prevent defaults Correct Answer Incorrect Answer

    Solution

    SEBI's decision to allow mutual funds to sell credit default swaps (CDS) aims to enhance liquidity and provide greater flexibility in managing risk and returns. Mutual funds can now both buy and sell CDS, which helps them manage credit exposure more efficiently.

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