Which of the following statements is FALSE?Question 10Select one:a.Trust deed is the document detailing the sources, uses and disbursement of funds in a trustb.Hedge fund is a type of managed fund.c.The responsible entity is both the trustee and the manager of the trust fund.d.Capital guaranteed funds provide a risk-free investment.
Question
Which of the following statements is FALSE?Question 10Select one:a.Trust deed is the document detailing the sources, uses and disbursement of funds in a trustb.Hedge fund is a type of managed fund.c.The responsible entity is both the trustee and the manager of the trust fund.d.Capital guaranteed funds provide a risk-free investment.
Solution
The false statement is: "d. Capital guaranteed funds provide a risk-free investment."
While capital guaranteed funds aim to secure the initial capital invested, they do not provide a completely risk-free investment. The guarantee is usually provided by a bank or an insurance company, and the safety of your investment depends on the solvency of that institution. If the institution fails, your capital is at risk. Furthermore, the guarantee usually applies only if you hold the investment for a specified period of time. If you withdraw your money earlier, you may lose some or all of your capital. Therefore, while capital guaranteed funds aim to minimize risk, they do not eliminate it completely.
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