The correct answer is: C. Both 1 and 2
Mutual funds are professionally managed investment companies that pool money from many investors to purchase securities. Mutual funds can invest in a variety of assets, including stocks, bonds, and other securities.
Mutual funds can participate in options trading and carrying forward transactions in securities. Options trading is a type of investment in which investors buy or sell the right to buy or sell an underlying asset at a specified price on or before a specified date. Carrying forward transactions is a type of investment in which investors buy or sell securities that are not yet settled.
Mutual funds can also invest in transferable securities in the money and capital markets. Transferable securities are securities that can be easily transferred from one owner to another. The money market is a market for short-term debt instruments, such as Treasury bills and commercial paper. The capital market is a market for long-term debt instruments, such as bonds and stocks.
Therefore, both statements 1 and 2 are correct.