Which One of the Following Statements Is False

question 89

Multiple Choice

Which one of the following statements is false?

• A)The responsibility for choosing the right mutual fund rests with the individual investor.
• B)Professional fund managers do make mistakes.
• C)Investors should evaluate their investments on a regular basis.
• D)There is no need to evaluate mutual fund investments,because investment companies hire the best professional managers they can to manage their funds.
• E)Individual investors should be involved in choosing a mutual fund,because they know how the objectives of a mutual fund match their own investment objectives.

Learn to calculate and interpret the net present value (NPV) of an investment.

Understand and apply the profitability index (PI) in investment evaluation.

Comprehend the internal rate of return (IRR) and its implications for investment decisions.

Recognize the limitations and potential pitfalls of using the IRR and PI for mutually exclusive investments.

---

Definitions:

Probability

A measure of the likelihood that a certain event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Sales

The exchange of a commodity for money; the action of selling something.

Poisson Approximation

A statistical technique used to estimate the probability of a given number of events happening in a fixed interval of time or space, assuming these events occur with a known constant mean rate and independently of the time since the last event.

Flat Tire

A condition where a tire loses all or most of its air, causing it to be incapable of functioning properly.