Explain what a mutual fund is and give an example of how they can help an investor diversify.
What will be an ideal response?
Student response will vary. A sample response follows. Mutual fund companies are financial intermediaries that sell portfolios of stocks and bonds. When someone buys a mutual fund, they gain a share in that fund’s entire portfolio of securities. This can enable someone to diversify by spreading their investment across hundreds of companies at a time, rather than directly investing in just a few companies. For example, if Ulrich has $5,000 to invest, he could buy a few shares of stock in Amazon. If he invests that $5,000 in a mutual fund index fund, however, his investment will include some Amazon stock but also stock from hundreds of other companies.
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Many argue that the "soft power" of the U.S. has been reduced, referring to its
a. negotiating ability. b. military presence. c. export level. d. moral leadership.
The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. What is the area of deadweight loss when Light-U-Up is regulated and follows a marginal cost pricing rule?
A) abd B) acg C) deg D) There is no deadweight loss.