Which of the Following Is Not True Regarding Mutual Funds

question 38

Multiple Choice

Which of the following is not true regarding mutual funds?

• A) There are thousands of funds with many different investing objectives.
• B) They offer small investors diversification and professional management.
• C) Dividends received from their investments are used to pay operational expenses, and capital gains are passed on to the mutual fund shareowners.
• D) Both dividends and gains are distributed to mutual fund shareowners.

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Definitions:

Cash Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits in the form of cash.

Declaration of Dividends

The formal announcement by a company's board of directors to distribute profits to shareholders, specifying the dividend amount and payment date.

Liquidating Dividend

A type of dividend paid by a company from its capital base, essentially returning part of the investors' original investment.

Paid-in Capital

Funds raised by a company through the issuance of shares to investors, representing the capital provided by shareholders through direct investments or share purchases.