Nathan Fuller Is Buying Shares in a Mutual Fund That

question 5

Multiple Choice

Nathan Fuller is buying shares in a mutual fund that invests in the same companies as those found in the S&P 500 and in roughly the same proportion. What type of mutual fund is he buying?

• A) Socially responsible fund
• B) Sector fund
• C) Small-cap fund
• D) Index fund
• E) Growth fund

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Definitions:

Book Income

The income reported by a corporation for financial reporting purposes, which may differ from taxable income.

Federal Income Tax

A tax levied by the U.S. government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Earnings and Profits

A measure of a corporation's ability to pay dividends to its shareholders, calculated for tax purposes.

FMV

Fair Market Value refers to the price at which property would sell on the open market between a willing buyer and a willing seller.