Question

‘Growth’, ‘income’ and ‘balanced’ are terms used to describe:

A.	insurance policies
B.	private equity funds
C.	cash management trusts
D.	equity trusts
E.	hedge funds.

Answer 1

Solution:-

Private quity funds generally invests in the equity of private companies. They don't invest in debt and also not in companies generally for the purpose of earning constant dividends. They are not associated with terms like 'growth', 'income' and 'balanced'.

Hedge funds is a more sophisticated version of a traditional fund and it uses various techniques such as short-selling, etc to reduce risk and earn a higher return on capital. They are not associated with terms like 'growth', 'income' and 'balanced'.

Cash management trusts and equity trusts are also not similar to mutual funds and other conventional asset classes where there are options to invest for growth, income or balanced between multiple asset classes. They are not associated with terms like 'growth', 'income' and 'balanced'.

The insurance policies allow the policy holders to choose multiple options, including ones that offer specific opportunities related to growth, regular income or balanced between debt and equity. They are associated with terms like 'growth', 'income' and 'balanced' and therefore, the correct option is option A.