A(n)_____ Allows for Diversification by Pooling the Capital of Many

question 7

Multiple Choice

A(n) _____ allows for diversification by pooling the capital of many investors in order to purchase more securities and reduce the risk of the investment portfolio

• A)Exchange traded security.
• B)Mutual fund.
• C)Margin Account.
• D)myIRA.

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Definitions:

Default

Failure to fulfill a legal obligation, especially failure to meet a debt payment or not fulfilling a contract condition.

Collateralized Debt Obligation

A complex structured finance product that pools together cash flow-generating assets and repackages them into tranches for sale to investors.

Credit Default Swap

A financial derivative or contract that allows an investor to "swap" or offset their credit risk with that of another investor.

Loan

A sum of money borrowed that is expected to be paid back with interest.