Which of the Following Is a Disadvantage to Mutual Fund

question 138

Multiple Choice

Which of the following is a disadvantage to mutual fund investing?

• A)On average they underperform the market returns.
• B)Costs may be high and vary dramatically from fund to fund.
• C)Not all mutual funds are truly safe.
• D)You cannot diversify away systematic risk.
• E)All of the above

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Definitions:

Temporary Difference

A discrepancy between the carrying amount of an asset or liability in the balance sheet and its tax base, creating taxable or deductible amounts in the future.

Straight-Line Depreciation

A technique for distributing the cost of an asset uniformly over its lifespan.

Capital Cost Allowance

Capital Cost Allowance is a tax deduction in some jurisdictions that represents depreciation for tax purposes, allowing businesses to deduct the cost of certain assets over a period.

Deferred Tax

A tax obligation or asset that results from temporary differences due to the different timing of recognition of income and expenses for tax and accounting purposes.