Asked by Colton Weatherwax on Jun 03, 2024
Verified
Rank the following fund categories from most risky to least risky:
I. Equity growth fund
II. Balanced fund
III. Sector fund
IV. Money market fund
A) IV, I, III, II
B) III, II, IV, I
C) I, II, III, IV
D) III, I, II, IV
Risky
An adjective describing the likelihood of losing part or all investment due to various types of investment or market risks.
Equity Growth Fund
A mutual fund that invests primarily in stocks with the goal of capital appreciation rather than income.
Sector Fund
A mutual fund that invests solely in businesses operating in a specific industry or economic sector, aiming to capture sector-specific growth.
- Gain insight into the fundamentals and intentions of differing mutual fund categories, paying particular attention to their tactics in timing the market and the extent of oversight by regulatory bodies.
Verified Answer
ZK
Zybrea KnightJun 05, 2024
Final Answer :
D
Explanation :
Sector funds are typically the most risky as they invest in a specific sector, making them more vulnerable to sector-specific downturns. Equity growth funds, which invest in stocks expected to grow at an above-average rate, are next in terms of risk. Balanced funds, which invest in a mix of stocks and bonds, offer a moderate risk level. Money market funds are the least risky as they invest in short-term debt securities, offering stability and liquidity.
Learning Objectives
- Gain insight into the fundamentals and intentions of differing mutual fund categories, paying particular attention to their tactics in timing the market and the extent of oversight by regulatory bodies.