Stock Brokers Typically Do Not Recommend No-Load Funds Because

question 114

Multiple Choice

Stock brokers typically do not recommend no-load funds because

• A) the return is lower than on load funds and brokers want to sell only the best funds to their clients.
• B) federal law prohibits brokers from selling no-load funds.
• C) no-load funds do not pay an upfront fee to the broker for selling them.
• D) there is no secondary market for them.

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Definitions:

Market Failure

A scenario in which the distribution of goods and services through a free market fails to be efficient, typically resulting in a decrease in overall social welfare.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, representing their gain.

Firm's Willingness

Refers to a company's readiness to engage in activities like selling at certain prices or producing specific quantities.

Willingness to Pay

The maximum amount an individual is prepared to sacrifice to procure a good or service or to avoid something undesirable.