Mutual Funds Have Several Disadvantages

question 11

Multiple Choice

Mutual funds have several disadvantages. Which of the following would apply?

• A)Diversification of assets reduces risk
• B)Mutual funds allow an investor to choose an international portfolio with high risk
• C)Mutual funds, on average, do not outperform the market
• D)No-load funds minimize transaction costs

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Definitions:

Money Supply Growth Rate

The rate at which the amount of money available in an economy grows, influencing inflation and economic activity.

Natural Rate of Unemployment

The level of unemployment consistent with a stable rate of inflation, determined by the structure of the labor market.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Natural Rate of Unemployment

The level of unemployment consistent with a stable rate of inflation, also seen as the equilibrium between the labor force and the number of available jobs.