Some people argue that there are two advantages to holding mutual funds. The first is that mutual funds provide an inexpensive way to hold a diversified portfolio. The second is that because of their expertise mutual fund managers should be able to consistently beat the market. Which of the following does the evidence show?
a. Diversification does reduce risk and mutual funds typically outperform the market.
b. Diversification does reduce risk, but mutual funds do not typically outperform the market.
c. Diversification does not reduce risk but mutual funds typically outperform the market.
d. Diversification does not reduce risk and mutual funds do not typically outperform the market.
b
You might also like to view...
If the Fed injects reserves into the banking system and they are held as excess reserves, then the money supply
A) increases by only the initial increase in reserves. B) increases by only one-half the initial increase in reserves. C) increases by a multiple of the initial increase in reserves. D) does not change.
Exhibit 12-2 Unemployment categories Category# ofIndividuals Frictional unemployment 20 Structural unemployment 35 Cyclical unemployment 60 Discouraged workers 5 Underemployed workers 10 Fully employed workers410 Population900 The unemployment rate for the economy in Exhibit 12-2 is:
A. 12.8 percent. B. 21.5 percent. C. 22.2 percent. D. 30.5 percent.
Discretionary fiscal policy
A. is the use of the money supply to maintain stable prices. B. is the purchase and sale of Treasury securities to influence economic growth and inflation. C. is the use of regulation to influence economic growth and inflation. D. is the use of government spending and tax policies to influence economic growth and inflation.
The value of the CPI for the reference base period is always
A) 100. B) 0. C) 1. D) 50. E) None of the above, because the value of the CPI is not always the same for all reference base periods.