Which of the Following Is Not a Reason Why the Majority

question 26

Multiple Choice

Which of the following is not a reason why the majority of actively managed mutual funds underperform the averages?

• A)Significant expenses associated with actively managed funds to support analysts,portfolio managers,and other overhead costs as well as trading costs to shift investment holdings
• B)Mutual funds frequently keep 5 percent or more in cash for such reasons as meeting unusually larger redemptions
• C)The relative performance between categories does not differ substantially over extended periods of time
• D)Fund overhead expenses including direct management fees can provide benefits other than performance
• E)All of the above are reasons

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Definitions:

Variable Quantities

Mathematical or physical quantities that can change in value under different conditions or over time.

Ratio Scale

A quantitative measurement scale that has a true zero point and allows for the comparison of absolute magnitudes of numbers.

Absolute Zero

The theoretical temperature at which a system is devoid of all thermal energy, representing the lower limit of the thermodynamic temperature scale, precisely 0 Kelvin or -273.15°C.

Interval Scale

A scale of measurement where the intervals between values are evenly distributed, allowing for meaningful comparisons of differences.