Mutual Funds with High Fees

question 37

Multiple Choice

Mutual funds with high fees:

• A) tend to perform better than funds with low fees.
• B) are usually passive funds.
• C) should be avoided because high fees reduce your return.
• D) are poor performers in the short run but provide above-market returns if held for a decade or longer.

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Definitions:

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, and insurance premiums.

Variable Cost

Costs that change in proportion to the level of activity or production volume, such as materials and labor.

Fixed Costs

Costs that remain constant regardless of how much is produced or sold, including expenses like rent, salaries, and insurance.

Net Income

The amount of profit that remains after all operating expenses, taxes, and costs have been subtracted from total revenue, essentially the bottom line.