What is the primary investment strategy of a balanced fund?

Investing solely in stocks Investing solely in bonds Maintaining a mix of stocks and bonds Investing in real estate

What is a key advantage of balanced funds for investors?

Guaranteed high returns Elimination of investment risk Portfolio diversification Focus on short-term gains

How do balanced funds typically manage risk?

By avoiding investments in stocks By investing only in government bonds By diversifying across asset classes like stocks and bonds By relying solely on real estate investments

What is a common characteristic of balanced funds?

They are primarily focused on high-growth startups They are exclusively designed for short-term trading They are frequently adjusted to respond to market conditions They are only accessible to institutional investors

How do balanced funds aim to mitigate the impact of inflation?

By investing heavily in commodities By holding a portion of their assets in debt instruments By focusing on short-term speculative investments By avoiding investments in the stock market

What is a potential drawback of balanced funds compared to pure equity funds?

They may generate lower returns during bull markets They are not subject to market risks They offer no tax benefits They are not suitable for long-term investors

What is a common tax advantage associated with balanced funds?

They are exempt from all capital gains taxes Fund managers can shift between debt and equity without triggering tax liabilities for investors They offer guaranteed tax deductions regardless of investment performance They are only taxed on dividends, not capital gains

What type of investor might find balanced funds particularly suitable?

Someone seeking the highest possible returns regardless of risk Someone with a low-risk tolerance looking for a balance between growth and income Someone primarily interested in short-term trading profits Someone exclusively focused on investing in startups

What is a recommended investment horizon for balanced funds?

Less than one year One to three years At least four to five years There is no specific recommended timeframe