A Mutual Fund Pools Money from Many Customers and Invests

question 230

Multiple Choice

A mutual fund pools money from many customers and invests the money in many firms. The fees charged by fund managers are:

• A) lower in bond funds.
• B) higher in passive funds.
• C) lower in passive funds.
• D) higher in bond funds.

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Definitions:

Existing Risk

Refers to the current risks involved in a situation or transaction, especially those that have already been identified or assessed.

Valid Contract

A legally binding agreement that meets all required elements, including offer, acceptance, consideration, and mutual consent.

Losses

The negative financial impact resulting from the difference between costs and revenues, often attributed to business operations, investments, or unforeseen events.

Submission

The act of presenting a document, proposal, or application for consideration or judgment.