Questions: Shareholders in mutual funds can receive a return on their investment in one of ways.

Shareholders in mutual funds can receive a return on their investment in one of ways.
Transcript text: Fill in the Blank Question Shareholders in mutual funds can receive a return on their investment in one of $\square$ ways. Need help? Review these concept resources. Read About the Concept
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Solution

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The answer is: three

Explanation: Shareholders in mutual funds can receive a return on their investment in one of three ways:

  1. Dividends: Mutual funds may earn income in the form of dividends on stocks or interest on bonds. The fund then distributes this income to its shareholders.

  2. Capital Gains Distributions: If the mutual fund sells securities that have increased in price, it realizes a capital gain. These gains are then distributed to shareholders.

  3. Increased Net Asset Value (NAV): If the market value of the fund's portfolio increases, the value of the fund's shares increases. Shareholders can sell their shares at a higher price than they paid, realizing a profit.

These are the primary ways shareholders can earn returns from mutual funds.

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