Which of the Following Statements About Mutual Funds Is Correct

question 102

Multiple Choice

Which of the following statements about mutual funds is correct?

• A)A mutual fund is a financial intermediary.
• B)A mutual fund acquires its funds primarily by selling shares to the public.
• C)People who buy shares from a mutual fund accept all of the risk and return associated with the mutual fund's portfolio.
• D)All of the above are correct.

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Definitions:

Marginal Social Cost

The additional cost to society of producing one extra unit of a good or service, considering both private costs and externalities.

Marginal Private Cost

The additional cost incurred by the producer for producing an extra unit of a good, not considering external effects.

Equilibrium

A state where market supply and demand balance each other, and, as a result, prices become stable.

Social Marginal Benefit

The additional benefit to society of consuming or producing one extra unit of a good or service, including both direct and external benefits.