In: Finance
Match the following types of funds to the securities that would typically be found in each portfolio.
I know that a is not #6 for a fact.
a.Growth funds 1. Foreign stocks
b.U.S. government bond funds 2. Moves money from stocks to bonds to maximize return
c.Growth and income funds 3. Market basket that represents the S&P 500
d.Life cycle funds 4. Mix of stocks, bonds and money market securities
e.Sector funds 5. 65% of stocks from the technology industry
f.Index funds 6. Dividend-paying blue-chip stocks
g.Balanced funds 7. Tailored to investor characteristics
h.International funds 8. High-growth and high P/E companies
i.Small company funds 9. Companies with strong earnings and some dividends
j.Asset allocation funds 10. Federal agency securities
k.Aggressive growth funds 11. Companies that probably trade on the OTC market
The following are the types of funds to the securities that would typically be found in each portfolio :-
a. Growth funds = 9. Companies with strong earnings and some dividends
Growth funds are basically funds that consists of high earning stocks and also do provide some or no income as dividends.
b. U.S. government bond funds = 10. Federal agency securities
The U.S. government bond funds consists mainly of the securities issued by the federal agencies.
c.Growth and income funds = 6. Dividend-paying blue-chip stocks
Growth and income funds are those funds that provide a steady growth and also generate a certain income through dividend.
d.Life cycle funds = 2. Moves money from stocks to bonds to maximize return
Life cycle funds are those which as the time of expiry is close, adjusted to lower risk assets to maximize the returns.
e.Sector funds = 5. 65% of stocks from the technology industry
Sector funds, as the name suggests, are funds where the investment is made on some particular sectors. Here, it is the technology sector.
f.Index funds = 3. Market basket that represents the S&P 500
Index funds represents a basket of stocks of an Index, in this case S&P 500.
g.Balanced funds = 4. Mix of stocks, bonds and money market securities
Balanced funds is something which consists of a mixture of varied securities like stocks, bonds etc., to maintain the risk and reward of the portfolio.
h.International funds = 1. Foreign stocks
International funds constitute stocks listed outside the country i.e. foreign stocks.
i.Small company funds = 11. Companies that probably trade on the OTC market
The small company funds are funds where the money is invested in companies that trade in Over The Counter market.
j.Asset allocation funds = 7. Tailored to investor characteristics
Asset allocation funds are funds where money is invested on securites based on the risk and reward, investor is ready to take. So it is tailor made as per the investor's risk appetite and reward expectations.
k.Aggressive growth funds = 8. High-growth and high P/E companies
Aggressive growth funds include high growth and high Price to earning ratio companies. This is because these companies are high on risk but also the rewards can be exponentially high.