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Which type of fund generally has the lowest average expense ratio?
Indexed funds
All but which one of the following indices is value weighted?
DJIA - Dow Jones Industrial Average
Mutual funds that hold both equities and fixed-income securities in relatively stable proportions are called __________.
balanced funds
Commodity and derivative markets allow firms to adjust their __________.
exposure to various business risks
Which of the following is not a type of managed investment company?
Unit Investment Trusts
__________ have become the main way for investors to speculate in precious metals.
Exchange-traded funds
__________ is not a derivative security.
A share of common stock.
The New York Stock Exchange is a good example of __________.
an auction market
The Standard & Poor's 500 is __________ weighted index.
a value
The efficient market hypothesis suggests that __________.
passive portfolio management strategies are the most appropriate investment strategies.
__________ represents an ownership share in a corporation.
Common stock
The yield on tax-exempt bonds is __________.
less than the yield on taxable bonds
The greatest percentage of mutual fund assets are invested in __________.
equity funds.
Which of the following is NOT a true statement regarding municipal bonds?
A municipal bond is a debt obligation issued by the federal government.
The purchase of a futures contract gives the buyer __________.
the obligation to buy an item at a specified price
Commercial paper is a short-term security issued by __________ to raise funds.
large well-known companies
Which of the following funds invest specifically in stocks of fast-growing companies?
Growth equity funds
Which of the following is not a characteristic of a money market instrument?
Maturity greater than 1 year
The process of polling potential investors regarding their interest in a forthcoming initial public offering (IPO) is called __________.
book building.
The value of a derivative security __________.
depends on the value of another related security
Underwriting is one of the services provided by __________.
Investment bankers
An individual who goes short in a futures position has the __________.
obligation to deliver the underlying commodity at contract maturity
The bid price of a Treasury bill is __________.
the price at which the dealer in Treasury bills is willing to buy the bill
__________ portfolio management calls for holding diversified portfolios without spending effort or resources attempting to improve investment performance through security analysis.
Passive
An investor in a T-bill earns interest by __________.
buying the bill at a discount from the face value to be received at maturity
Net asset value is defined as __________.
market value of assets minus liabilities divided by shares outstanding
When the market is more optimistic about a firm, its share price will __________; as a result, it will need to issue __________ shares to raise funds that are needed.
rise; fewer
Which type of fund is often priced at a significant discount to net asset value?
Closed-end fund
Which of the following is NOT an example of a financial intermediary?
IBM
Investors who want to liquidate their holdings in a closed-end fund may sell their shares __________.
on the open market
In securities markets, there should be a risk-return trade-off with higher-risk assets having __________ expected returns than lower-risk assets.
higher
Security selection refers to __________.
choosing specific securities within each asset class
_________ are examples of financial intermediaries.
All of the choices are correct
Initial public offerings (IPOs) are usually __________ relative to the levels at which their prices stabilize after they begin trading in the secondary market.
underpriced
A fund that invests in securities worldwide, including the United States of America, is called __________.
a global fund
Which of the following is NOT a typical characteristic of common stock ownership?
Unlimited liability
The most marketable money market securities are __________.
Treasury bills
The primary market where new security issues are offered to the public is a good example of __________.
a brokered market
Financial institutions that specialize in assisting corporations in primary market transactions are called __________.
Investment bankers
In a __________ underwriting arrangement, the underwriter assumes the full risk that shares may not be sold to the public at the stipulated offering price.
firm-commitment
