Which One of the Following Would Best Describe a Mutual

question 1

Multiple Choice

Which one of the following would best describe a mutual fund?

• A) An investment that is available at many banks and is FDIC insured
• B) A company that manages a portfolio that is purchased by pooling the money of its investors
• C) A debt contract that is issued by a company and offers interest payment on the loan
• D) Ownership of shares in a corporation with no guarantee the company will be profitable

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Definitions:

Future Value

The value of a current asset at a specified future date, based on an expected rate of growth or return.

Annuity Due

An annuity for which the payment is due immediately at the beginning of each period, rather than at the end.

Ordinary Annuities

Identical financial amounts distributed at the termination of back-to-back periods, within a set period.

Annuities Due

An annuity for which the payment is due at the beginning of each period instead of at the end, often used in lease agreements and insurance premiums.