You Are Considering Investing in a No-Load Mutual Fund That

question 26

Multiple Choice

You are considering investing in a no-load mutual fund that focuses on growth stocks or in an index fund based on the TSX.The growth stocks fund had a five year average annual return of 11 percent with MER of 2.6 percent.The index fund had a five year average annual return of 11 percent with MER of 1.1 percent.Assuming equal risk,you should buy

• A)the index fund because it has a lower MER.
• B)the growth fund because its portfolio performed better.
• C)some of both,for diversification,as they performed equally.
• D)neither,because the expenses are too high for funds of this type.

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Definitions:

Output

The total amount of goods or services produced by a company, industry, or economic system.

Total Variable Costs

These are expenses that change in proportion to the activity of a business, such as costs for raw materials or production.

Output

The quantity of goods or services produced within a given period by a firm, industry, or economy.