INVESTMENTS(LL)W/CONNECT
11th Edition
ISBN: 9781260433920
Author: Bodie
Publisher: McGraw-Hill Publishing Co.
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Question
Chapter 4, Problem 3PS
Summary Introduction
To determine:
The reason behind the requirement of keeping cash or cash equivalent securities in case of open end funds, but not in the case of closed end funds.
Introduction:
Open end funds are offered by the fund company directly to investors. The quantity of shares is fixed in case of open end funds. Closed end funds on the other hand, are generally sold in the secondary market and they are not redeemed by the fund manager. Due to such an arrangement the trading of shares might take place at a discount or substantial premium with respect to its NAV.
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Students have asked these similar questions
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Chapter 4 Solutions
INVESTMENTS(LL)W/CONNECT
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Similar questions
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- Which of the following investment has the lowest risks and lowest returns! EE savings bonds. Money market savings accounts. Real estate. Exchange-traded funds.arrow_forwardInvestors have no control over ________________ distributions when investing in mutual funds. a) capital gain b) domestic yields c) inflationaryarrow_forwardStudies or data on mutual performance versus a market index find: Multiple Choice most mutual funds outperform the index. These findings refute the semi-strong efficient markets. most mutual funds outperform the index.These findings refute the strong form of efficient markets. most mutual funds under perform the index.These findings support the semi-strong form of the efficient market. mutual funds are riskless compared to the index.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_forwardWhich mutual fund tends to be invested in companies with relatively low P/E ratios and good growth potential to its peers? A : Growth and income fund B : Value fund C : Growth fund D : Balanced fundarrow_forwardThe 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.arrow_forward
- Balanced funds, life-cycle funds, and asset allocation funds all invest in both the stock and bond markets. What are the differences among these types of funds?arrow_forwardWhich of the following is correct? Transactions within the spot market can be used to mitigate and hedge risk. In an efficient market, it is not possible that a stock of the firm has a price equal to its intrinsic value. Index funds are funds that reflect the performance of a specific index An example of an indirect transfer of capital through investment banks is when an investor buys a unit of a fund from a bank that is invested in various financial assets such as bonds and stocks of other companies.arrow_forwardDifferences between hedge funds and mutual funds are that Multiple Choice A hedge fund managers can pursue strategies not available to mutual funds, such as short selling, heavy use of derivatives, and leverage. B hedge funds are typically open only to wealthy or institutional investors. C hedge funds are only subject to minimal SEC regulation. D hedge funds are commonly structured as private partnerships. E All of the options.arrow_forward
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