In Comparing Actively Managed Mutual Funds with Those Funds That

question 48

Multiple Choice

In comparing actively managed mutual funds with those funds that simply buy and hold a large market portfolio (index funds) , we would expect that

• A)the actively managed funds provide a higher return than the index funds.
• B)the index funds provide a higher return than the actively managed funds.
• C)actively managed funds and index funds provide the same returns.
• D)index funds provide a lower return than actively managed funds only if taxes are taken into consideration.

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Definitions:

Special Order Price

The price charged for a product or service that is outside the company's normal scope of work or products; often tailored pricing for a specific customer request.

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product cost calculation, contrasting with absorption costing that also includes fixed costs.

Product Costs

Costs that are incurred to create a product that is intended for sale to customers. This includes direct materials, direct labor, and manufacturing overhead.

Direct Labor

Costs associated with employees who are directly involved in the production of goods or the provision of services, such as wages for factory workers.