For Your Investment Program, You Have Occasionally Been Holding a Few

question 66

Multiple Choice

For your investment program, you have occasionally been holding a few stocks that you purchased from various brokers. Based on this, which advantages of mutual funds would be appealing to you?

• A) diversification
• B) professional management
• C) avoidance of bad brokers
• D) Only A and C
• E) A, B, and C

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Definitions:

Cumulative Voting

A method of voting for corporate directors that allows shareholders to multiply their shares by the number of directorships being voted on and to allocate their votes among the candidates as they see fit.

Common Shares

Equity securities that represent ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends or capital appreciation.

Directors

Individuals elected by shareholders to oversee the management and make strategic decisions for a corporation.

Model Business Corporation Act (MBCA)

A set of model laws prepared by the American Bar Association to provide a standard for the incorporation and operation of corporations in the United States.