The investment management company which handles the portfolio of an investment company is hired by ________.
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A. B. C. D.Explanation
The investment management company which handles the portfolio of an investment company is hired by the investment company's board of directors.
The correct answer to the question is A. the investment company's board of directors.
When it comes to the management of a portfolio for an investment company, the responsibility lies with the investment management company. The investment management company is an external entity that is hired by the investment company to handle the portfolio and make investment decisions on behalf of the investment company.
The investment company's board of directors, which represents the interests of the shareholders, is responsible for selecting and hiring the investment management company. The board of directors is typically composed of individuals who are elected by the shareholders of the investment company.
The board of directors has the fiduciary duty to act in the best interests of the shareholders. As part of this duty, they have the authority to make decisions regarding the hiring and termination of the investment management company. The board evaluates various factors such as the investment management company's track record, expertise, investment philosophy, fees, and other relevant criteria to make an informed decision.
Therefore, option A is the correct answer, as the investment management company is hired by the investment company's board of directors to handle the portfolio on behalf of the investment company. Option B (the shareholders) is not directly involved in hiring the investment management company but entrusts this responsibility to the board of directors. Option D (an advisory firm) is not the entity that directly hires the investment management company but may provide recommendations or advice to the board of directors during the selection process. Option C (none of these answers) is incorrect because the board of directors is indeed responsible for hiring the investment management company.