You Use $3,000 of Your Own Money to Start a Dog-Sitting

question 153

Multiple Choice

You use $3,000 of your own money to start a dog-sitting service. During the first year you earn a 10% return on your investment. If the current interest rate on savings is 7%, you earn an economic profit of

• A) -$90.
• B) $90.
• C) $210.
• D) $300.

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Definitions:

Expense Ratio

The annual fee that mutual funds, ETFs, and other managed portfolios charge their shareholders, expressed as a percentage of assets under management.

Mutual Fund

A pooled investment fund that gathers resources from several investors to place into various investment options such as stocks, bonds, and money market instruments.

Front-end Load

A fee paid by an investor at the time of entering a fund, such as a mutual fund, which is typically used to cover the fund's sales and marketing costs.

Expense Ratio

A measure of the total cost of managing and operating a fund, including administrative and management fees, expressed as a percentage of the fund's total assets.