22. Which of the following statements is/are TRUE regarding the benefits of mutu

Question

22. Which of the following statements is/are TRUE regarding the benefits of mutual funds? CIRCLE ALL THAT APPLY (2 points) Liquidity intermediation means that investors can convert their investments into a. cash quickly and at a low cost, unlike the situation of redeeming a CD or selling a bond investment before its maturity date. b. Denomination intermediation means that small investors can gain access to securities through the mutual fund that they would be unable to purchase directly due to the large denominations in which certain securities are traded. Managerial expertise means that investors can utilize the knowledge and experience of professional fund managers who have the ability to consistently out-performed market benchmarks or a randomly selected portfolio. Cost advantages means that mutual funds are able to obtain lower transaction fees than individual investors due to the large scale of their trades and overall volume. c. d. Diversification means that groups of small investors can pool their money in order to gain access to a portfolio of investments that is composed of a wide variety of e.

Explanation / Answer

All the statements-a,b,c,d and e are true. This is so because these are nothing but five principle benefits provided by the mutual funds. Each of them holds true.

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