Before Taking Management and Trading Costs into Account, Arbitrage Activities

question 112

Multiple Choice

Before taking management and trading costs into account, arbitrage activities in the market ensure that the returns of actively managed funds are

• A) significantly higher than those of index funds with similar risk.
• B) significantly lower than those of index funds with similar risk.
• C) about the same as those of index funds with similar risk.
• D) more volatile than those of index funds with similar risk.

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Definitions:

Populations

Groups of individuals of the same species living and interacting within a specific area.

Primate Order

A taxonomic category that includes humans, apes, monkeys, and other related animals characterized by large brains, forward-facing eyes, and opposable thumbs.

Glaciation

The process of being covered by glaciers or ice sheets, often associated with ice ages and significant impacts on Earth's climate and geography.

Dense Tropical Forests

Refers to thickly wooded areas found in tropical regions with high biodiversity and significant rainfall.