The answer that you should tell Lior is that dividend funds tend to be less volatile and lower risk than

equity funds. A dividend fund is a type of equity fund that invests primarily in dividend-paying stocks,

which are shares of companies that distribute a portion of their earnings to shareholders on a regular

basis. A dividend fund provides income and capital appreciation to investors, as well as tax

advantages for eligible dividends paid by Canadian corporations. A dividend fund tends to be less

volatile and lower risk than an equity fund that invests in non-dividend-paying stocks or growth

stocks, which are shares of companies that reinvest their earnings into expanding their business

rather than paying dividends. This is because dividend-paying stocks are usually issued by well-

established and profitable companies that have stable cash flows and earnings, which make them

more resilient to market fluctuations and economic downturns. Therefore, option C is correct

regarding what you should tell Lior. The other options are not correct or relevant to what you should

tell Lior. Option A is false because equity funds are not more appropriate than dividend funds if Lior

requires a steady flow of income; rather, dividend funds are more suitable for income-oriented

investors who want to receive regular dividends from their investments. Option B is false because

dividend funds do not generate tax-preferred income while income from equity funds is fully taxable;

rather, both types of funds generate taxable income for investors, but eligible dividends from

Canadian corporations may qualify for a lower tax rate than other types of income due to the

dividend tax credit. Option D is false because equity funds do not hold common shares while

dividend funds hold only preferred shares; rather, both types of funds hold common shares, but

dividend funds focus on common shares that pay dividends, while equity funds may also hold

common shares that do not pay dividends or pay low dividends. Reference: [Dividend Funds |

GetSmarterAboutMoney.ca], [Equity Funds | GetSmarterAboutMoney.ca], [Dividend Tax Credit |

GetSmarterAboutMoney.ca]