Question

1)All but one of the following types of mutual funds holds a combination of stocks and bonds. Which of the following is NOT a blended mutual fund?

Group of answer choices

balanced fund

life cycle fund

growth and income fund

TIPS fund

flexible allocation fund

2)Which of the following activities are associated with fundamental security analysis?

Group of answer choices

Analyzing chart patterns

Analyzing company financial statements

Analyzing the price trend

Analyzing indicators of market sentiment

3) After considering your risk tolerance, investment time horizon and financial need, you decide to invest 60% of your retirement funds into equity mutual funds and 40% into fixed income mutual funds. If your objective is safety of principal and tax efficiency, then which of the following sub-allocations for fixed income would be most appropriate?

Group of answer choices

25% US Government bond fund and 15% Colorado municipal bond fund

20% BBB-rated corporate bond fund and 20% foreign bond fund

22% A-rated corporate bond fund and 18% REIT

30% high-yield bond fund and 10% TIPS bond fund

Answer 1

Solution:

1.

TIPS : Treasury Inflation - Protection securities are type of security that is issued by the government and it is indexed to inflation. This type of mutual fund invests only in bonds.

Hence this is the correct answer. All other funds given in options invest in both equity and bonds.

2.

Fundamental analysis is analysing the intrinsic value of the company with the help of financial statements etc.

Hence correct option is B) Analysing financial statement

3.

Objective of investment in bond is to capital protection and tax savings . Hence government bond that is less risky and municipal bond that gives tax benefit is the better option .

Hence correct option is A ) 25% in US government bond fund and 15% in Colorado municipal fund