Question

    A retail investor with a moderate risk tolerance is

    looking to diversify their investment portfolio and gain exposure to the stock market. They are interested in a hands-off approach and prefer not to actively manage their investments. The investor is seeking a mutual fund that offers a diversified portfolio tracking a specific market index, requiring minimal active management and aligning with their moderate risk tolerance and preference for a passive investment strategy.Which type of mutual fund would be the most suitable option for this investor?
    A Sectoral Fund Correct Answer Incorrect Answer
    B Index Fund Correct Answer Incorrect Answer
    C Hedge Fund Correct Answer Incorrect Answer
    D Private Equity Fund Correct Answer Incorrect Answer
    E Fund of Funds Correct Answer Incorrect Answer

    Solution

    Index funds offer a diversified portfolio that tracks a specific market index,requiring minimal active management and aligning with the investor's moderate risk tolerance and preference for a passive investment strategy.

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