Which one of the following would best describe a mutual fund?
A. An investment that is available at many banks and is FDIC insured
B. A company that manages a portfolio that is purchased by pooling the money of its investors
C. A debt contract that is issued by a company and offers interest payment on the loan
D. Ownership of shares in a corporation with no guarantee the company will be profitable
B. A company that manages a portfolio that is purchased by pooling the money of its investors
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Based on the neoclassical theory of investment, which aspect of a booming economy helps to explain the procyclicality of investment?
A) Tax revenues are likely to be rising. B) The real interest rate is likely to be rising. C) Capital goods are becoming more expensive. D) Financing constraints are likely to be relaxed for many businesses.
If government spending and taxes increase by the same amount,
A) the IS curve does not shift B) the IS curve shift leftward C) the IS curve shifts rightward D) the LM curve shifts downward