Which of the Following Are Three Key Advantages of Mutual

question 12

Multiple Choice

Which of the following are three key advantages of mutual funds?

• A)diversification, taxes, high initial investments
• B)low initial investments, professional management, diversification
• C)liquidity, high initial investments, diversification
• D)professional management, high initial investments, taxes
• E)costs, diversification, liquidity

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Definitions:

Return on Assets (ROA)

A financial ratio indicating how profitable a company is relative to its total assets, calculated as net income divided by total assets.

Discounted Payback

The period of time it takes for the cash flows from an investment to equal the initial cost of the investment, accounting for the time value of money.

Rate of Return

The improvement or reduction in the value of an investment within a specified interval, articulated as a percentage of the investment’s first cost.

Cash Inflow

Money coming into a business or project from various sources, including sales, investments, and financing activities.