Letter Grades Are Most Frequently Assigned to Mutual Funds Based

question 39

Multiple Choice

Letter grades are most frequently assigned to mutual funds based on the fund's:

• A)projected future returns.
• B)historical rates of return.
• C)management style.
• D)portfolio size.
• E)investment objective.

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Definitions:

Residual Income

A profitability measure that subtracts an opportunity cost for capital from the profits generated.

Minimum Required Return

The minimum required return is the lowest acceptable profit or gain on an investment, factoring in the risk and opportunity cost.

Operating Income

Income generated from regular business operations, excluding costs of goods sold and other operating expenses.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest.