High Fees

question 95

Multiple Choice

High fees:

• A) are not likely to generate higher returns in the long run because of the efficient markets hypothesis.
• B) are not likely to generate higher returns in the long run because of diversification issues.
• C) can often signal a higher-quality management and thus higher returns in the long run.
• D) have little impact on your long-run returns to investing.

---

Definitions:

Joint Ventures

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task or business activity.

Accounting Methods

The specific rules and procedures used by a company to prepare its financial statements, including cost, accrual, and cash basis methods.

Jointly Controlled Entities

A corporate structure where two or more parties have control and share responsibility, rights, and liabilities for the entity's activities.

Line-by-Line Method

The line-by-line method is an accounting technique used in consolidating the financial statements of a parent company and its subsidiaries, where each line item of the subsidiary’s financial statements is added to the parent’s corresponding items.