Which One of These Correctly Applies to Mutual Funds

question 99

Multiple Choice

Which one of these correctly applies to mutual funds?

• A)mutual funds are a costly means of achieving portfolio diversification.
• B)funds are required to limit their annual fees and expenses to less than 1 percent of the portfolio value.
• C)you can generally buy additional shares in the fund at any time.
• D)shareholders sell their shares to other shareholders.

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Definitions:

Fair Values

The estimated market value of an asset or liability, based on current conditions and knowledgeable, willing parties' transactions.

Book Values

The value of an asset as reported on the balance sheet, calculated as the original cost of the asset minus any depreciation, amortization, or impairment costs.

Gain or Loss

The financial result of disposing of an asset or settling a liability for more or less than its carrying amount.

Equity Method

An accounting technique used when a company holds significant influence over another but does not control it, allowing the investment to be recorded at original cost and adjusted for the investor's share of profits and losses.