An Official Description of a Particular Managed Fund's Planned Investment

question 13

Multiple Choice

An official description of a particular managed fund's planned investment policy can be found in the fund's ________.

• A)prospectus
• B)indenture
• C)investment statement
• D)12b-1 forms

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Definitions:

High Dividends

The distribution of a portion of a company's earnings, decided by the board of directors, to its shareholders, which is considered high relative to other companies or historical payouts.

Moral Hazard

The situation in which an entity has the incentive to take undue risks because the cost of those risks will be borne, at least in part, by others.

Firm-Specific Risk

The risk associated with an individual company, which can be reduced through diversification in investment.

Market Risk

The possibility that investors might incur losses because of elements influencing the general performance of the financial markets.