Question

Uncle Chandrasekhar is planning to buy a car. However, he is running short of one-fourth of the total price of the car that he is planning to buy in a year. You observe a few companies witnessing a surge in their value. Choose the correct statement with regards to the situation.

Assertion (A): Advice him to invest his funds through a mutual fund on a growing company to reap a good return amount and buy a car in a year.

Reason (R): The mutual fund would reap profit with zero chance of facing a loss or no risk.

• A. Both A and R are true, and R is the correct explanation of A.
• B. Both A and R are true, but R is not the correct explanation of A.
• C. A is true, but R is false.
• D. A is false, but R is true.

Answer 1

The correct option is C A is true, but R is false.

A mutual fund is a mode of investment through which people can invest money in the share market and debentures. Mutual fund institutions use our money to buy shares or debentures of various companies to get profitable returns. However, the cost of risk lies with the investor if the company, where the investment has been made, faces a loss.