SIE Exam 6 (management companies): Questions & Answers: Updated Solution

A retired investor seeks monthly income along with preservation of capital and minimum risk. Which of the following funds would be a suitable recommendation? A Special situation fund B Specialty fund C U .S. Government securities fund D Growth fund (Ans- C An income fund would likely invest in all of the following securities EXCEPT: A common stocks B preferred stocks Ccorporate bonds D government bonds (Ans- A An income fund would likely invest in which of the following securities? A Common stocks B ADRs C Debentures and Preferred stocks D Income bonds (Ans- C A growth fund would likely invest in which of the following securities? A Non-convertible corporate bonds B Government bondsC Convertible bonds D Preferred stocks (Ans- C Growth funds would likely invest in common stocks for capital gains; they could also invest in convertible bonds, since they are an "equivalent" to the common stock; and if the common stock price rises substantially, their price will rise as well (because the market will force them to trade at parity with each other). An investor wishes to buy mutual fund shares that provide him with income and capital gains potential. Based on this information, the appropriate recommendation is a: A balanced fund B hedge fund C sector fund D dual purpose fund(Ans