Podcast
Questions and Answers
What is the major difference between open-ended and closed-end mutual funds?
What is the major difference between open-ended and closed-end mutual funds?
- Open-ended funds can sell new shares to investors and redeem outstanding shares on demand, while closed-end funds issue a fixed number of shares through an IPO and do not create new shares. (correct)
- Open-ended funds do not create new shares, while closed-end funds can sell new shares to investors and redeem outstanding shares on demand.
- Open-ended funds cannot be bought and sold on a stock exchange, while closed-end funds can issue new shares through an IPO.
- Open-ended funds issue a fixed number of shares through an IPO, while closed-end funds can sell new shares to investors and redeem outstanding shares on demand.
What advantage do mutual funds have in terms of transaction costs and commissions compared to individual investors buying securities directly?
What advantage do mutual funds have in terms of transaction costs and commissions compared to individual investors buying securities directly?
- Mutual funds generally incur higher transaction costs and commissions compared to individual investors.
- Mutual funds have no advantage over individual investors in terms of transaction costs and commissions.
- Mutual funds can generate greater economies of scale by incurring lower transaction costs and commissions than individual investors. (correct)
- Mutual funds do not incur any transaction costs or commissions, unlike individual investors.
Which statement accurately describes hedge funds?
Which statement accurately describes hedge funds?
- Hedge funds are investment pools that focus on small investors and diversify risk by pooling financial resources from individuals and companies.
- Hedge funds primarily invest in government securities and are open to all types of investors.
- Hedge funds are investment pools that solicit funds from wealthy individuals and other investors, investing these funds on their behalf. Their investments are restricted to more wealthy clients. (correct)
- Hedge funds are similar to mutual funds but primarily invest in stocks and do not accept investments from commercial banks.
What type of investors do hedge funds primarily accept investments from?
What type of investors do hedge funds primarily accept investments from?
How do closed-end funds raise capital for their initial investments?
How do closed-end funds raise capital for their initial investments?
What characteristic differentiates open-ended mutual funds from closed-end mutual funds?
What characteristic differentiates open-ended mutual funds from closed-end mutual funds?
What type of investors do hedge funds target?
What type of investors do hedge funds target?
Which type of mutual fund includes both bond and stock securities?
Which type of mutual fund includes both bond and stock securities?
What type of risk is predominant for short-term funds?
What type of risk is predominant for short-term funds?
What type of investors own the majority of both long- and short-term funds?
What type of investors own the majority of both long- and short-term funds?
What do money market mutual funds provide an alternative investment to?
What do money market mutual funds provide an alternative investment to?
What does the spread earned on MMMF investments relative to deposits indicate?
What does the spread earned on MMMF investments relative to deposits indicate?
What benefit do fund managers obtain by pooling investments from a large number of small investors?
What benefit do fund managers obtain by pooling investments from a large number of small investors?
What type of risk is more systematic or market based for long-term equity funds?
What type of risk is more systematic or market based for long-term equity funds?
