the economics of money, banking, and financial markets

351 #

© 2014 Pearson Canada Inc.#

12.5 Mutual Funds

1. 
   

   Mutual funds were created ____.
   A) in order to provide insurance to all households
   B) in order to limit interest rates that are paid on deposits
   C) to pool the savings of small investors and use the proceeds to invest on their behalf
   D) Only A and B of the above
   Answer: C
   Diff: 1 Type: MC Page Ref: 283
   Skill: Recall
   Objective List: 12.5 Examine the key aspects of mutual funds

   
   


2. 
   

   ____ are financial intermediaries that pool the resources of many small
   investors by selling them shares and using the proceeds to buy securities.
   A) Pension funds
   B) Investment banks
   C) Mutual funds
   D) Credit unions
   Answer: C
   Diff: 1 Type: MC Page Ref: 283
   Skill: Recall
   Objective List: 12.5 Examine the key aspects of mutual funds

   
   


3. 
   

   ____ are financial intermediaries that acquire funds by selling shares to many individuals
   and using the proceeds to purchase diversified portfolios of stocks and bonds.
   A) Mutual funds
   B) Investment banks
   C) Finance companies
   D) Credit unions
   Answer: A
   Diff: 1 Type: MC Page Ref: 283
   Skill: Recall
   Objective List: 12.5 Examine the key aspects of mutual funds

   
   


4. 
   

   Which of the following are financial intermediaries?
   A) Life insurance companies
   B) Mutual funds
   C) Stock markets
   D) State and local government retirement funds
   Answer: B
   Diff: 1 Type: MC Page Ref: 283
   Skill: Recall
   Objective List: 12.5 Examine the key aspects of mutual funds