PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Question
Chapter 14, Problem 12PS
Summary Introduction
To find out: Whether the given statements are true or false.
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What is Pension Funds and insurance companies?
What is Private Investors?
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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…
Chapter 14 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 14 - Terminology Fill in the blanks, using the...Ch. 14 - Prob. 2PSCh. 14 - Sources of funds True or false? a. Net stock...Ch. 14 - Prob. 4PSCh. 14 - Company ownership What do we mean when we say that...Ch. 14 - Prob. 6PSCh. 14 - Prob. 7PSCh. 14 - Prob. 8PSCh. 14 - Corporate debt Which of the following features...Ch. 14 - Financial markets and intermediaries. True or...
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Similar questions
- A fee charged by some mutual funds to new investors is the: Group of answer choices -management fee. -front-end load. -low-load fee. -back-end load. -transaction fee.arrow_forwardMutual funds collect money from its _____ A) lenders B) shareholders C) banks D) loan sharks and invest those funds in _____. A) diversified portfolios of securities B) bank CDs C) precious metal and artarrow_forwardWhat value do mutual funds add for individual investors and how?arrow_forward
- Explain each of the investment instruments stated below that offered by financial institutions. These are the investment instruments you like to invest. Explain and justify why. 1. stocks 2. bonds 3. Annuitiesarrow_forwardWhich of the following investment has the lowest risks and lowest returns! EE savings bonds. Money market savings accounts. Real estate. Exchange-traded funds.arrow_forwardDetermine whether each of the following is direct financing or indirect financing. : investing in a mutual fund Direct Financing? Indirect Financing? taking out a loan at a commercial bank Direct Financing? Indirect Financing? selling stock on the stock market Direct Financing? Indirect Financing? selling bonds on the capital market Direct Financing? Indirect Financing?arrow_forward
- Would you expect a typical open-end fixed-income mutual fund to have higher or lower operating expenses than a fixed-income unit investment trust? Why?arrow_forwardWhy are mutual funds considered good investments for long-term investors?arrow_forwardWhat are some important differences between mutual funds, Exchange Traded Funds, and hedge funds? How are they similar?arrow_forward
- Which of the following securities is least attractive for a pension fund? Corporate bonds Municipal bonds US Government bonds Growth stocksarrow_forwardIn the context of the different types of securities for investment, match each sentence to the correct type of security. * Bonds Stocks Mutual funds Exchange-Traded Funds (ETFs) Real estate Alternative and complex products Collectibles A financial company receives money from different investors and invests the money in the financial markets, providing professional management, diversification, affordability, and liquidity. Pooled investment funds that offer an investor an interest in a professionaly managed and diversified portfolio of investments, and their shares are traded on stock exchanges. Securities representing a loan an investor makes to the issuer in exchange for interest payments and the repayment of principal at its maturity date. Investments in assets such as rare coins, works of art, old stamps, paintings, that appeal to collectors and investors. Securities that represent ownership in a company, usually providing dividends and the right to vote in the…arrow_forwardMutual fund companies perform similar functions to banks in that they are deposit-taking institutions that pay interest to their depositors. *True or Falsearrow_forward
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