Q:
Which of the following statements regarding the performance of a mutual fund would be permitted under current rules?
A) Income and safety-oriented investors need look no further than the Muscat GNMA fund. Since the only investments held by the fund are GNMA certificates and short-term T-Bills, the fund is government-guaranteed for safety.
B) If an investor made a one-time deposit of $10,000 in the LIB Aggressive growth fund 5 years ago, and reinvested all dividends and gains, the total value today would be $26,230.75.
C) The Fantastic Growth Fund has been paying regular dividends and capital gains for the past 6 years. Those who invest now may look forward to continued distributions from the fund in the future.
D) The XY Fund has been producing an average of a 15% total return for the past five years. If a person invested $10,000 today, in five years the total value of the investment would be approximately $21,000.
A:
The correct answer is B)
A mutual fund may only use past performance in illustrations or presentations. Representations regarding future performance based on the fund’s past performance are prohibited.

RELATED FAQS

  1. Which of the following statements regarding the performance of a mutual fund would ...

    A) Income and safety-oriented investors need look no further than the Muscat GNMA fund. Since the only investments held by ...
  2. How do I calculate the loan-to-value ratio using Excel?

    Learn what a mutual fund and a money market fund are, and understand the differences between each and how they serve various ...
  3. Do mutual funds pay dividends or interest?

    Learn how and why mutual funds pay interest or dividends, including the different funds and which types generate each type ...
  4. Which option is better on a mutual fund: a growth option or a dividend reinvestment ...

    When selecting a mutual fund, an investor has to make an almost endless number of choices. Among the more confusing decisions ...
  5. There are several major factors that make mutual funds attractive investments for ...

    The correct answer is b. While the exchange, or conversion, privilege in a family of mutual funds is certainly an advantage, ...
  6. How much of a company's stock can a mutual fund own?

    There is no written rule that stipulates how much of a company a mutual fund can own. Instead, there are two major factors ...
RELATED TERMS
  1. Survivorship Bias

    The tendency for mutual funds with poor performance to be dropped ...
  2. Closed Fund

    A mutual fund that has been closed - either temporarily or permanently ...
  3. Family Of Funds

    A group of mutual funds offered by one investment or fund company. ...
  4. Capital Gains Distribution

    The payment of proceeds prompted by a fund manager's liquidation ...
  5. Money Market Fund

    An investment fund that holds the objective to earn interest ...
  6. Capital Appreciation Fund

    A mutual fund that attempts to increase asset value primarily ...
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center