Question

An income type of mutual fund typically consists of a basket of stocks with relatively a. large dividends and large price volatility. b. large dividends and small price volatility. c. small dividends and large price volatility. d. small dividends and small price volatility. e. characteristics similar to gold.

Answer 1

Large dividends and small price volatility.

Step-by-step explanation:

Income Funds are aimed at generating regular revenue rather than a gain or appreciation in capital.

This category of funds is therefore invested in shares, common stock and payout dividend inventories. They do not invest in gold as investment in gold does not create regular income and thus have lower risk because it invests in instruments which have low price volatility.

Large companies have predictable profits and steady payout policies, whereas small companies have unpredictable (more volatility) wages and therefore are investing less in their dividends.