The board of directors of a mutual fund is responsible for:
I. authorizing purchases and sales of securities made by the fund.
II. approving the fund’s contract with its investment adviser.
III. ensuring that the fund complies with federal securities laws regarding such issues as 12b-1 fees.
IV. establishing the fund’s dividend and capital gains policy.
Explanation
Answer: C - The board of directors of a mutual fund is responsible for the activities described in Selections II, III, and IV only. The board is responsible for approving the fund’s contract with its investment adviser, ensuring that the fund complies with federal securities laws regarding such issues as 12b-1 fees, and establishing the fund’s dividend and capital gains policy. It is not involved in the fund’s day-to-day operations, such as the purchases and sales of securities as described in Selection I.
