A Drawback of Actively Managed Funds Is

question 2

Multiple Choice

A drawback of actively managed funds is:

• A)that mutual funds that are not specialized do not offer enough diversification.
• B)that significant tax consequences occur when there is a lot of trading.
• C)the difficulty in redeeming shares from the fund.
• D)the uncertainty of recovering at least a portion of the initial investment.

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Definitions:

Federal Grant

A sum of money given by the federal government to a state, organization, or individual for a specific purpose or project.

Expendable Trust Fund

A fund consisting of assets held in a trust that can be used up or expended, typically for designated purposes as per the trust's terms.

Modified Accrual Accounting

An accounting method that combines aspects of both accrual and cash accounting, recognizing revenues when they are earned and expenses when they are incurred or paid.