Why Is It Important to Determine What Investment Goals You

question 102

Multiple Choice

Why is it important to determine what investment goals you are trying to achieve before you invest in a mutual fund?

• A)The mutual fund company may attempt to change your goals to meet their fund offerings.
• B)You must provide the mutual fund company with your defined goals before they allow you to purchase shares.
• C)You must look for a mutual fund with the same or similar investment goals that you have in order to find an appropriate fund.
• D)All of the above are correct.
• E)Only A and B are correct.

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Definitions:

ERG Theory

A motivation theory developed by Clayton Alderfer that categorizes human needs into three groups: Existence, Relatedness, and Growth, suggesting individuals are motivated by these needs in a hierarchical fashion.

VIE Theory

A psychological theory proposing that an individual's motivational force is determined by the perceived value of the outcome, the expectancy of achieving the outcome, and the instrumentality of the action.

Need-Based Theories

Psychological theories that focus on understanding human needs and how they influence behavior, particularly in the context of motivation.

Agency Theory

An economic theory that examines the relationship between principals (owners) and agents (executives), focusing on the conflicts of interest that may arise.