Which One of the Following Is False Regarding Mutual Fund

question 54

Multiple Choice

Which one of the following is false regarding mutual fund investments?

• A)Mutual funds invest in a variety of securities.
• B)Diversification provided by a mutual fund reduces risk.
• C)The goals of one mutual fund investor may differ from those of another.
• D)Since mutual fund managers are professionals,there is no need for the investor to evaluate a mutual fund.
• E)Mutual fund investments range from very conservative to extremely speculative investments.

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Definitions:

Corporation

A corporation is a legal entity that is separate and distinct from its owners, which can enter into contracts, own assets, and is subject to taxation.

Subchapter S Corporation

A type of corporation designed for small businesses that allows income to be passed through to shareholders and taxed at individual rates, avoiding double taxation.

Net Income

The amount of revenue that remains after deducting all expenses, taxes, and costs from the total revenue of a business or individual.

Capital Gains

refer to the profit made from selling an asset for more than its purchase price.