Types of Investment Companies Based on Portfolio Makeup
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Questions and Answers

What type of funds issues new shares representing ownership of a portfolio and is commonly known as a fund?

  • Exchange-traded funds
  • Open-end funds (correct)
  • Closed-end funds
  • Hedge funds

Which type of investment company is typically used by investors with substantial levels of capital like pension fund sponsors and high-net-worth individuals?

  • Hedge funds
  • Exchange-traded funds
  • Private management firms (correct)
  • Mutual funds

What investment company offers a general solution to an investment problem and then markets it to potential investors?

  • Mutual funds (correct)
  • Open-end funds
  • Hedge funds
  • Closed-end funds

For which type of investment company are management fees typically higher due to providing special attention to individual clients?

<p>Private management firms (C)</p> Signup and view all the answers

What distinguishes private management firms from mutual funds in terms of client interaction?

<p>Private management firms develop personal relationships with clients (D)</p> Signup and view all the answers

Which type of investment company utilizes a general 'blueprint' portfolio for most clients but adapts it for special needs?

<p>Open-end funds (A)</p> Signup and view all the answers

In what aspect do common stock funds differ from bond funds?

<p>Portfolio composition (D)</p> Signup and view all the answers

What distinguishes flexible portfolio funds from hybrid funds?

<p>Allocation of assets (C)</p> Signup and view all the answers

Which type of investment company seeks high total returns through a mix of stocks, bonds, and money-market securities?

<p>Flexible portfolio funds (B)</p> Signup and view all the answers

How do bond funds primarily differ from common stock funds?

<p>Income generation objective (D)</p> Signup and view all the answers

Which investment company type seeks to provide current income, principal safety, and liquidity through diversified short-term securities?

<p>Money Market Funds (A)</p> Signup and view all the answers

What distinguishes flexible portfolio funds from bond funds?

<p>Income generation objective (A)</p> Signup and view all the answers

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