Conflicts arise in the mutual funds industry because ________ cannot effectively monitor ________.

Question

Quizplus · Accepted Answer

Conflicts arise when investment advisers prioritize their own interests over those of their clients (shareholders), and shareholders are unable to effectively monitor or influence the investment decisions made by advisers. Directors may also be subject to conflicts of interest, but they have a fiduciary duty to act in the best interests of the shareholders they represent. Stocks that will outperform the overall market are not directly relevant to conflicts within the mutual funds industry.

Conflicts Arise in the Mutual Funds Industry Because ________ Cannot