Which of the Following Statements Is TRUE

question 28

Multiple Choice

Which of the following statements is TRUE?
I. A mutual fund pools money from many different investors and uses that money to invest in many different firms.
II. Mutual funds that are run by managers who try to pick the best performing stocks usually outperform the S&P 500.
III. Passive mutual funds do not try to select winning stocks; they mimic broader markets like the S&P 500.

• A) I only
• B) I and II only
• C) I and III only
• D) II and III only

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Definitions:

SEC Registration

The process by which securities are registered with the Securities and Exchange Commission, a requirement for securities to be legally sold to the public in the United States.

Commercial Paper

An unsecured, short-term debt instrument issued by a corporation, typically for financing short-term liabilities, with maturities ranging from a few days to 270 days.

TSX

The Toronto Stock Exchange, one of the largest stock exchanges in the world, based in Canada.

DAX

A blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange.