Which of the following is true regarding the risk-return profile of mutual fund schemes?
A
Moving from liquid funds to debt funds, investment risk increases.
B
Moving from liquid funds to equity funds, potential returns increase.
C
Both A and B
D
Neither A nor B
Correct Option:
C
Explanation
As investors move from liquid funds to debt funds, investment risk generally increases. Moving further from liquid funds to equity funds typically increases both investment risk and the potential for higher long-term returns.
