1. Which of the following is NOT a reason that a mutual fund would be holding cash/liquid ETFs? a. The stock and bond markets are both volatile b. The ETF market is volatile c. To be able to take advantage of market opportunities that might present themselves d. To facilitate redemption requests from shareholders 2. If interest rates increase, what would you expect to happen to the NAVUS of a money market fund? a. It would stay the same b. It would decrease c. It's impossible to say - it depends on how the underlying securities react

1. Which of the following is NOT a reason that a mutual fund would be holding cash/liquid ETFs? a. The stock and bond markets are both volatile b. The ETF market is volatile c. To be able to take advantage of market opportunities that might present themselves d. To facilitate redemption requests from shareholders 2. If interest rates increase, what would you expect to happen to the NAVUS of a money market fund? a. It would stay the same b. It would decrease c. It's impossible to say - it depends on how the underlying securities react

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Your client prefers to invest in ETFS because they are cost effective and provide broad diversification. However, she doesn't have the time or knowledge to select that appropriate ETFS and needs professional management for selection and management of the asset allocation within the portfolio. What fee-based arrangement would you recommend? O a) A Multi-Disciplinary Account. O b) An ETF Wrap Account. Oc) A Discretionary Account. d) A Mutual Fund Wrap Account.
Now suppose there is no financial intermediary to handle liquidity shocks. However, at t = 1 a market for bonds opens up and agents can trade their wealth at t = 1 for wealth at t = 2. Each bond pays 1 at t = 2 and its price is pM. Calculate the consumer's optimal investment decision IM at t = 0, the price of the bond pM, and the optimal consumption in the two states cM, cM. Compare the mutual fund and bond market allocations: are c4 and c bigger or smaller than cf and c, respectively?
If the Bank of England wanted to discourage investment spending and reduce aggregate demand, it could Select one: O a. buy securities on the open market O b. reduce the required reserve ratio O c. lower the discount rate O d. sell securities on the open market
The risk of default on the part of the importer—risk of noncompletion—is present as soon as: A) Private equity funds differ from traditional venture capital funds. List and discuss three differences between them.
The NZ Equity market is illiquid, both in the primary and secondary markets. What does market illiquidity mean? What are the reasons for the low liquidity? How might equity market liquidity be improved?
Both EV-to-EBITDA and PE multiples can be linked to interest rates through the discount rate used in discounted cash flow valuation. Holding all else equal, when discount rates are higher, valuation ratios are lower. Perhaps because of this, we tend to see stock prices as well as, the value of private business transactions decline when interest rates increase. Macroeconomists like to describe interest rates as consisting of two components: the real interest rate component and an expected inflation component. In some situations, increases in interest rates are the result of an increasing real interest rate; in other situations, the cause of an interest rate increase is an increase in expected inflation. How might valuation ratios be expected to respond to an interest rate increase generated by an increase in expected inflation versus an interest rate increase that represents an increase in real interest rates?
If an investor had enough money to diversify adequatelythrough buying individual securities, why might he orshe still consider buying mutual funds instead?
Which of the following defines a hedge fund the most? 1. A collective investment model based on issuing a fixed number of shares which are not redeemable from the fund. 2. A negotiable security that represents securities of a foreign company and allows that company's shares to trade in the U.S. financial markets. 3. A diversified portfolio that typically does not limit the number of shares it can offer, and they are bought and sold on demand. 4. A type of investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio construction and risk-management techniques to improve performance.
2. Is Warren Buffet’s Berkshire Hathaway mutual fund safer than US T Bonds (or opportunity costs)? How would you prove this statement?
In the federal funds markets, financial institutions can borrow money from the Federal Reserve. True False Assuming the STRIPS are held to maturity, their investors know the precise payouts they'll receive. True False
Which of the following regarding the investor sentiment theory of the closed end fund puzzle is FALSE? a) Investors in closed end funds are not as important an ownership group in the assets of the funds’ investment portfolios. b) The closed end fund is riskier than the underlying portfolio. c) Arbitrageurs are subject to limits to arbitrage. d) The noise trader risk is diversifiable.
Choose the best answer Between equity and debt capital a.Equity is riskier than debt b.Debt is safer than equity c.Both debt and equity are equally risky d.No option is correct

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS