Which fund includes a mix of stocks, bonds, and money markets?

Which fund includes a mix of stocks, bonds, and money markets?

• A. Asset Allocation Fund
• B. Growth Fund
• C. Index Fund
• D. Prospectus

Answer: (A)

Asset allocation funds are designed to hold a mix of different asset classes—stocks, bonds, and cash equivalents like money market instruments—to diversify risk and provide a balanced risk/return profile. They maintain a target allocation and rebalance to stay near that mix, which is exactly what a fund with stocks, bonds, and money markets does. The other options don’t fit this purpose: a growth fund concentrates on high-growth stocks, an index fund tracks a specific index (often a single asset class like stocks or bonds), and a prospectus is just a disclosure document about a fund, not a fund itself.

Asset allocation funds are designed to hold a mix of different asset classes—stocks, bonds, and cash equivalents like money market instruments—to diversify risk and provide a balanced risk/return profile. They maintain a target allocation and rebalance to stay near that mix, which is exactly what a fund with stocks, bonds, and money markets does.

The other options don’t fit this purpose: a growth fund concentrates on high-growth stocks, an index fund tracks a specific index (often a single asset class like stocks or bonds), and a prospectus is just a disclosure document about a fund, not a fund itself.