Which of the Following Statements Best Describes Mutual Funds

question 42

Multiple Choice

Which of the following statements best describes mutual funds?

• A) They are illegal in the United States, but popular in Europe.
• B) They enable investors to buy many shares of stock in a single firm at a lower cost than using a stockbroker.
• C) They provide good investment returns, but insufficient diversification.
• D) They enable many investors with limited funds to buy a diversified portfolio.
• E) They appeal only to wealthy investors.

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Definitions:

Biological Diversity

The variety and variability of life on Earth, including diversity within species, between species, and of ecosystems.

Biodegradable

Materials that can be broken down into natural elements by microorganisms over time, without harming the environment.

Decomposers

Organisms such as fungi and bacteria that break down dead organic material, returning nutrients to the ecosystem.

Biomass Pyramid

A graphical representation showing the relative amount of living organic matter available at each trophic level in an ecosystem.