False Statements about Portfolio Management

Explanation

The two constraints faced by mutual funds are: laws created to protect the investors and investment choices as defined in the prospectus.

The other statements are true. Interest and dividends are typically taxed at a higher rate than capital gains. Deferred tax investments such as 401(k) plans allow the investor to delay paying taxes until a later date and are an important tool for an invest with current tax concerns. The investment policy imposes discipline on both the client and portfolio manager.