Which One of These Correctly Applies to Mutual Funds

question 23

Multiple Choice

Which one of these correctly applies to mutual funds?

• A) Mutual funds are a costly means of achieving portfolio diversification.
• B) Funds are required to limit their annual fees and expenses to less than 1 percent of the portfolio value.
• C) You can generally buy additional shares in the fund at any time.
• D) Shareholders sell their shares to other shareholders.

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Definitions:

Yield Curve

A graph showing the relationship between interest rates of bonds of equal credit quality but different maturities, often indicating economic expectations.

Short-Term Rates

The interest rates on debt securities that mature in the short term, often less than one year, which are a key indicator of the monetary policy stance of an economy.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulating banks, maintaining the stability of the financial system, and providing financial services to depository institutions, the U.S. government, and foreign official institutions.

Forward Interest Rate

The interest rate agreed upon today for a loan that will start at a future date, often implied in the terms of a forward rate agreement.