Which of the Following Is Not True Regarding Mutual Funds

question 38

Multiple Choice

Which of the following is not true regarding mutual funds?

• A) There are thousands of funds with many different investing objectives.
• B) They offer small investors diversification and professional management.
• C) Dividends received from their investments are used to pay operational expenses, and capital gains are passed on to the mutual fund shareowners.
• D) Both dividends and gains are distributed to mutual fund shareowners.

---

Definitions:

Return on Investment

A measure of the profitability of an investment expressed as a percentage of the initial amount invested.

Turnover

The rate at which inventory or assets are replaced over a given period, or alternatively, the total amount of a company's sales or revenues.

Net Operating Income

The total profit of a company after operating expenses are subtracted, but before taxes and interest are deducted.

Average Operating Assets

The average value of the assets involved or used in the operating activities of a company over a given period, typically calculated as the average of the opening and closing balances of these assets.