Donel Is Investing in a Mutual Fund That Really Is

question 28

Multiple Choice

Donel is investing in a mutual fund that really is not as diversified as other funds.It may enjoy good capital gains but is also much riskier when it comes to unsystematic risk.This fund is called a(n) ________ fund.

• A)growth-and-income
• B)sector
• C)life cycle
• D)asset allocation
• E)bond

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Definitions:

Financial Liabilities

Obligations that require an entity to pay money or deliver financial assets to another party in the future, which can arise from borrowing, purchasing goods or services on credit, or issuing bonds.

Bank Overdraft

A facility allowing an entity to withdraw more money from a bank account than has been deposited, within a previously agreed limit.

Unsecured Convertible Notes

Debt instruments that can be converted into a predetermined amount of the issuer's equity and do not have collateral backing.

Debentures Issued

Long-term securities issued by a company to raise capital, backed only by the general creditworthiness and reputation of the issuer.