Multiple choice

Investments made by a mutual fund on behalf of investors are accounted as

  1. assets

  2. liabilities

  3. capital

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a mutual fund invests money on behalf of investors, those investments become assets of the fund - stocks, bonds, cash, etc. They are not liabilities (owed to others) nor capital (the investors' money). The fund owns these assets, which are held in trust for unit holders.

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