SIE Exam Question 95: Answer and Explanation

Question: 95

Which of the following investments would not be appropriate for an investor with a capital growth objective?

• A. Unit investment trust
• B. Common stock
• C. Growth mutual fund
• D. Zero coupon bond

Correct Answer: D

Explanation:

A zero coupon bond would not be appropriate for an investor with a capital growth objective. Bonds and annuities are better suited for investors with a conservative or fixed income objective. Unit investment trusts are similar to mutual funds in that they offer a variety of portfolios to invest in, including growth. Common stocks are perfect for growth investors as they provide the opportunity to invest directly in the company to maximize capital gains. Growth mutual funds offer investors a single price for a growth-focused portfolio consisting of any number of companies.