A Mutual Fund Typically Performs All of the Following Functions

question 81

Multiple Choice

A mutual fund typically performs all of the following functions, EXCEPT that it

• A) provides alternative risk-return options.
• B) eliminates unsystematic risk.
• C) provides diversification.
• D) derives a risk-adjusted performance that is consistently superior to risk-adjusted net return of the aggregate market.
• E) administers the account, keeps records, and provides timely information.

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Definitions:

Parts Resale Value

The estimated resale value of machine parts or other components after they have been used or at the end of their useful life.

CCA Rate

Capital Cost Allowance Rate, the rate at which a business can claim depreciation on capital assets for tax purposes in certain jurisdictions.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return.

Depreciation Tax Shield

The reduction in taxable income for businesses that results from claiming depreciation expenses, thereby lowering tax liabilities.