Multiple Choice
Which of the following is an appropriate investment objective for a mutual fund with a buy-and-hold approach?
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7. Receivables and Investments
Introduction to Investments in Securities
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What is one reason why a small-scale investor might participate in a syndicate when investing in securities?
A
To avoid paying any transaction fees on investments
B
To eliminate all investment risks associated with securities
C
To pool resources with others and gain access to larger investment opportunities
D
To guarantee a fixed rate of return regardless of market conditions
Verified step by step guidance1
Understand the concept of a syndicate: A syndicate is a group of investors who pool their resources together to invest in larger opportunities that might be inaccessible to individual investors due to financial constraints.
Analyze the options provided in the question: Evaluate each choice to determine its validity based on the characteristics of syndicates and investment principles.
Option 1: 'To avoid paying any transaction fees on investments' - This is incorrect because syndicates do not eliminate transaction fees; fees are typically shared among members.
Option 2: 'To eliminate all investment risks associated with securities' - This is incorrect because syndicates do not eliminate risks; they only allow for shared risk among members.
Option 3: 'To pool resources with others and gain access to larger investment opportunities' - This is correct because pooling resources is a primary reason for forming syndicates, enabling access to investments that require substantial capital.
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