A Benefit of Mutual Funds That Mainly Buy Stocks and Hold

question 67

Multiple Choice

A benefit of mutual funds that mainly buy stocks and hold them is that

• A)the price of the stocks they hold always appreciate.
• B)dividend payments on such stocks are not taxed.
• C)they help avoid taxes as the capital gains on these stocks are implicit.
• D)​they promise annual returns of more than 50% of the principal amount.

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Definitions:

Decision Quality

The effectiveness and outcomes of decisions, often measured in terms of their practicality, accuracy, and relevance.

Expert

A person who has a comprehensive and authoritative knowledge of or skill in a particular area, gained through extensive experience or study.

Judgment

The ability to make considered decisions or form opinions through the evaluation of available evidence and reasoning.

Participative Leadership

A leadership style where decision-making is shared among group members to encourage employee involvement in organizational decisions.