Which One of the Following Statements Is False

question 115

Multiple Choice

Which one of the following statements is false?

• A)Investors purchase mutual funds for diversification.
• B)Investors purchase mutual funds because of their professional management.
• C)Investors who purchase mutual funds are guaranteed a higher rate of return than if they were to purchase comparable stocks and bonds directly.
• D)Professional mutual fund managers work for an investment company.
• E)Even the best portfolio managers sometimes make mistakes.

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Definitions:

Accounting Cycle

The collective process of recording and processing all financial transactions of a company, from when the transaction occurs, to its representation on financial statements, followed by closure of accounts.

Working Capital

The excess of the current assets of a business over its current liabilities.

Solvency

The ability of a firm to pay its debts as they come due.

Current Ratio

A financial ratio that is computed by dividing current assets by current liabilities.