SIE Understanding Products and Their Risks Practice Question 60

Correct Answer: B

Explanation:

B: Choice B is correct because this is the primary purpose of LGIPs, so cash reserves may be available on short notice, with a favorable rate of return. Choice A is incorrect because LGIPs are developed by one or more government entities for use by governmental entities. Mutual funds are developed by companies for the use of the general public. Choice C is incorrect because LGIPs are formed according to a given state's laws. Choice D is incorrect because LGIPs do provide diversification.