What investment would be most suitable for Gretchen Hoffman, a conservative investor seeking income and growth of capital?

For Gretchen Hoffman, a conservative investor looking for both income and growth of capital, a bond mutual fund is a fitting choice. Bond mutual funds are primarily focused on fixed-income investments, which tend to provide more stability and lower risk compared to equities. They typically generate regular income through interest payments, which aligns with her need for income.

In terms of growth, while bond mutual funds may not offer the same level of capital appreciation potential as stock investments, they can still provide a moderate level of growth, particularly in a stable or mildly growing economy. This dual focus on income generation and the potential for capital appreciation makes bond mutual funds well-suited for conservative investors.

Other options may present risks or investment characteristics that could be inappropriate for Gretchen's conservative investment profile. For example, stock mutual funds and equity funds are heavily equity-based, which can be more volatile and may not offer the consistent income that a conservative investor seeks. Balanced mutual funds, while potentially appropriate, often include a higher proportion of equities than a conservative investor might be comfortable with, thus introducing greater risk to the capital.