Question : What is a sovereign wealth fund?
Option 1: A fund created by a government to invest its excess revenue in financial assets
Option 2: A fund created by a corporation to invest in government bonds
Option 3: A fund created by a non-profit organization to invest in social welfare programs
Option 4: A fund created by a wealthy individual to invest in real estate
Correct Answer: A fund created by a government to invest its excess revenue in financial assets
Solution : The correct answer is (a). A fund created by a government to invest its excess revenue in financial assets.
A sovereign wealth fund (SWF) is a state-owned investment fund that is established by a government, typically fueled by surplus revenues from commodities, such as oil, natural gas, or minerals. The primary purpose of a sovereign wealth fund is to invest these excess funds in a diversified portfolio of financial assets, such as stocks, bonds, real estate, and other investment vehicles, with the goal of generating long-term returns and preserving wealth for future generations.
Sovereign wealth funds are commonly created by countries with significant reserves of foreign currency or revenue from natural resources. These funds can play various roles, such as stabilizing the economy, saving for future generations, supporting strategic industries, funding infrastructure projects, or diversifying the government's investment holdings.
