What is the shortcoming of using peer group performance comparisons to judge performance of a fund? A)  The fund manager’s investment objectives may be more meaningful than its peers. B)  The fund manager’s investment objectives may be more cash dominant than its peers. C)  The fund manager’s investment objectives may be the same as its peers. D) The fund manager’s investment objectives may be narrower or wider than its peers.

Q: What is a benchmark and why is there a need to compare the fund's return vis-a-vis a benchmark?

A: Benchmark is considered as a standard against which the actual performances of the securities are…

Q: Explain the problems of adverse selection and moral hazard caused by asymmetric information. How can…

A: A financial institution is a corporation or person who acts as another go for different parties in…

Q: When evaluating a fund based on its cash-on-cash returns, what other considerations should you keep…

A: Cash on cash return:  The entire return gained on a real estate investment property is measured…

Q: A board sets aside resources to earn investment income to support general operations. Would the…

A: In most cases, the money that has been set aside by the Board with the intention of producing…

Q: In your own words, describe ETF’s investment objective, strategy and benchmark. Please include fund…

A: An ETF is a collection of assets whose shares are traded on a stock market. They combine the…

Q: Performance evaluation allows us to assess the performance of fund managers going beyond historical…

A: The total risk is divided into two parts- 1. Systematic Risk that cannot be diversified…

Q: discuss the harmful effects of illusion of control bias to investors

A: Behavioral finance studies the impact of an investor's psychology on its investment pattern.…

Q: What is the difference between an enterprise fund and an internal service fund?

A: Fund: It can be defined as a sum of money that is made available or kept aside for a specified…

Q: Which of the following statements best explains how NPV can help decision makers?  Group of answer…

A: Net present value (NPV):The net present value is a technique used for making the investment…

Q: Give one example of overconfidence bias in investing and how to overcome it. Thank you!

A: Overconfidence bias can be defined as the overestimation of skills and abilities by an individual.…

Q: Traditional approach to financial management is how the funds can be utilised efectively. Select…

A: False

Q: What are the consequences of using a poor benchmark to evaluate a fund manager?

A: Benchmark is the standard used for the comparison by the company to know the current performance…

Q: what are the key characteristics of active fund management and passive fund management, focusing on…

A: Funds management is the process of managing a financial institution's cash flow. The fund manager…

Q: What's the difference between the two analysis approach used by a portfolio manager in determining…

A: INTRODUCTION: A portfolio is a grouping or assortment of stocks. A shareholder may own a single…

Q: How do financial institutions reduce monitoring costs associated with the flow of funds from fund…

A: The Financial institutions are acting as intermediaries and they are receiving deposits from various…

Q: In order to overcome the differences in the preferences of surplus units and deficit usnits, it may…

A: The large institution takes funds from the small investors and they prepare large amount of funds…

Q: what differentiates a superior investment manager from an inferior one?

A: 1. Superior investment managers are having a better degree of control over their emptions in…

Q: What are the characteristic of a proprietary fund? How do internal service funds and enterprise…

A: The question is based on the concept of Accounting theory

Q: why are Overconfidence and cognitive bias, Representatives heuristic, loss aversion, herding bias,…

A: Behavioral finance is that area of finance which deals with the influence of psychology and the…

Q: The board of directors of AMSB are confused between IRR and NPV. Briefly discuss the Internal Rate…

A: The internal rate of return method is a capital budgeting method which helps in finding out the rate…

Q: Which of the following scenario shows the financial manager’s financing function? a. Prioritizing…

A: Financial manager's functions include: a) Getting financing at lower cost b) Planning and allocating…

Q: What are the limitations/problems from classifying performance using raw returns? and, What are the…

A: Limitations of classifying performance using raw returns: Raw data may be incomplete and may not…

Q: Anticipate TWO (2) drawbacks from the adverse selection on financial safety nets.

A: Financial Safety Nets- A financial safety net is not one savings account or an insurance guideline.…

Q: Who are the suppliers and demanders of funds in the financial system and in what ways can they…

A: There are some main participants in financial system that act as suppliers and demanders of funds.…

Q: True or false:  The levels of fixed-cost assets and funds that management selects affect the…

A: In Funds management there are managers who manage the funds and based on their skills and talents…

Q: This is known as:

A: Fund refers to the money which should be kept aside for meeting some specific purpose. In this, the…

Q: What can a person try to do to genuinely control spending to better achieve financial success?

A: Financial performance should be converted into a range of financial goals, properties, or net worth…

Q: What is the investment objective for the following investments: 1. PRMX fund 2. VWELX fund 3. SPY…

A: A separate account is a form of investment account in which the investor owns the assets but the…

Q: Compared to direct transactions between ultimate fund users and providers, fee-charging,…

A: Financial Brokers serves as intermediary between investors and seekers of investments. They give…

Q: An individual investor has approached you and wants to understand the two types of fund structures,…

A: Open Ended Fund Structures: It is a scheme of mutual fund in which units are offered for sale…

Q: The following is a disadvantage of ARR investment appraisal method (select one):   A. multiple or…

A: Accounting rate of return is a method that is used for evaluating the investment proposal. It is…

Q: The ultimate authority of a fund's track record is its current profile prospectus.

A: the ultimate authority of a funds track record is not its current profile prospectus but includes…

Q: demanders fund in finan

A: Net demanders : In simple words, capital market in any economy are composed of two types of…

Q: As a financial manager,;one's goals for the client is to help them do the following EXCEPT: A.…

A: The financial manager is the person responsible for looking after the financial health of the…

Q: Which of the following statement is incorrect?   The expected cost of risk per participant will…

A: (b) The pooling structure minimizes the risk (standard deviation) for pool participants when losses…

Q: What is the MAIN role of fund research houses in the funds management industry? A) To rate…

A: The correct options are A, B.C As fund research house is to rate the individual securities comparing…

Q: State the key characteristics of active fund management and passive fund management, focusing on how…

A: Fund management refers to the process of managing a financial institution's cash flow and the fund…

Q: the federal fund  is more effective than  The banker’s acceptance in improving the economic growth.…

A: The federal funds rate is the interest rate at which banks lend money to each other overnight. It is…

Q: assumptions/drawbacks that the four measures of fund performance share with the Sharpe Ratio,…

A: Introduction:- Portfolio management refers to the management of portfolio. This is done with the…

Q: What are the advantages of evaluating fund performance based on Internal Rate of Return (IRR)? Why…

A: The internal rate of return is the expected annual growth rate from an investment. Whenever the IRR…

Q: Explain the difference between cash flow statement and fund flow statement and identify why…

A: The Cash Flow Statement is a financial statement that provides information about the cash inflows…

Flow of Funds

The flow of funds is the financial accounts of the nation, which monitor and control the cash flow among various sectors or industries, or markets. Central banks use these flow of funds statements to acquire macroeconomic data, to publish cash inflow and cash outflow statements of the nation. This flow of funds system is utilized to identify economic activity and changes in the economy. It is used by Federal Reserve to determine the Gross Domestic Product (GDP) of the nation and to implement monetary policy and fiscal policies.