PRIN.OF CORPORATE FINANCE
PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 14, Problem 12PS
Summary Introduction

To find out: Whether the given statements are true or false.

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Which of the following is an example of direct finance? Select one:investors buy shares in a mutual fundA pension fund manager buys a security in the secondary marketinvestors buy shares in a mutual fundNone of the answers are correctcompany buy security in a secondary market
1 . Which investor type would most likely have high tolerance for risk, long investment horizon, and low liquidity needs? a) pension funds b) commercial banks c)individuals d) mutual funds 2. Which manager most likely receives the highest compensation through fees? a) passive manager b) fixed income asset manager c) smart beta manager d) alternative asset manager 3. A no-load mutual fund will most likely charge which of the following fee? a) redemption fee b) up front fee c) management fee d) all of the above 4. The diversification between any two assets most likely to occur when which of the following conditions is met? a) Correlation between the two assets is less than 1.0 b) Correlation between the two assets is greater than 1 c) Correlation between the two assets is strictly negative d) Correlation between the two assets is strictly zero 5. When the economy is at the lowest point of the business cycle (the "through"), which are the best industries to invest in? a) Cyclical…
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