What is a mutual fund? What advantage does owning a share in a mutual fund have over owning a share of stock?
A company whose assets are the stocks and bonds of other companies is a mutual fund. Holding a share in
a mutual fund allows you to minimize risk by diversifying. Instead of holding a share of stock in one
company, you, in effect, own fractions of stocks in hundreds of companies.
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A firm practicing group price discrimination that has constant marginal cost will
A) maximize total profit by maximizing profit for each group separately. B) will charge the same price to all groups. C) will act like a monopoly and treat all groups the same. D) sets p = MC.
When General Motors pays an outside vendor for auto parts, this is an external cost.
Answer the following statement true (T) or false (F)
One of the sources of monopoly power for a monopoly may be:
A. diseconomies of scale. B. differentiated products. C. free entry and exit. D. patents.
The price a perfectly competitive firm receives for its output
A) is determined by the interaction of the firm and all of the consumers who buy from the firm. B) is determined by the interaction of all sellers and all buyers in the firm's market. C) will not change in response to changes in market demand and supply because the firm is a price taker. D) will be lowered by the firm in order to sell more output.