David Palmer has decided to take control of his financial life and go through his mutual fund statements. He notices his funds pay him a few pennies a month per share, but he has not seen a check for any of that money. He also notices a small fraction of a share purchased each month as well. What common feature of mutual funds is this scenario exhibiting?

Question

Quizplus · Accepted Answer

This scenario is exhibiting dividend reinvestment, where dividends paid by the mutual fund are automatically used to purchase additional shares, rather than being paid out in cash.

David Palmer Has Decided to Take Control of His Financial