A Mutual Fund Is Created by Which One of the Following

question 82

Multiple Choice

A mutual fund is created by which one of the following parties?

• A) fund shareholders
• B) fund's board of directors
• C) SEC
• D) investment advisory firm
• E) discount broker

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Definitions:

Asymmetric Information

A scenario where one participant in a deal possesses greater or more advanced information than the other.

Adverse Selection

A situation where uneven information leads to transactions between parties where one party has more or better information than the other, often seen in insurance markets.

Occur

To happen or take place, referring to events or phenomena.

Adverse Selection

A situation in which one party in a transaction has more information than the other, often leading to an imbalance in which high-risk individuals are more likely to select and benefit from certain agreements, policies, or products.