SIE Exam Question 122: Answer and Explanation

Question: 122

Which of the following mutual funds would be most likely to be passively managed?

• A. Bond fund
• B. Growth fund
• C. Income fund
• D. Index fund

Correct Answer: D

Explanation:

An index mutual fund is the most likely to be passively managed because it seeks to mimic the performance of a specified index by holding the same stocks as the chosen index. Bond, growth, and income funds are all actively managed by portfolio managers who pick and choose different securities depending on the type of fund and the investment goal.