Question

Your elderly client has $10,000 to invest and seeks preservation of capital and a moderate income stream. If she has never invested in mutual funds before and all of her savings are in bank CDs and saving accounts, you should recommend a:

A)T-bill.
B)government bond fund.
C)money market fund.
D)tax-exempt bond fund.

Answer 1

A government bond fund is recommended for preservation of capital and a moderate income stream for an elderly client.

Step-by-step explanation:

For your elderly client's goal of preservation of capital and a moderate income stream, the recommended option would be a government bond fund. A government bond fund consists of a portfolio of government bonds issued by the federal government or its agencies. These bonds are considered low-risk investments because the government is virtually certain to pay off the bond. The fund provides a stable income stream in the form of regular interest payments from the bond holdings.By investing in a government bond fund, your elderly client can preserve her capital and receive a moderate income stream without the need for active management of individual investments.