True or false, if false why? 1. When compared to mutual funds and ETFs, hedge fu

Question

True or false, if false why? 1. When compared to mutual funds and ETFs, hedge funds have seen little regulation by the SEC. 2. Money market mutual funds usually invest their money in a well-diversified portfolio of common stocks. 3. A smaller bid-ask spread means that the dealer will realize a lower profit. 4. If General Electric were to issue new stock this year, this would be considered a secondary market transaction since the company already has stock outstanding. 5. The weak form of the efficient markets hypothesis (EMH) states that current market prices reflect all pertinent

Explanation / Answer

1.False,Both mutual funds and ETFs hold portfolios of stocks and/or bonds and occasionally something more exotic, such as precious metals or commodities. They must adhere to the same regulations covering what they can own, how much can be concentrated in one or a few holdings, how much money they can borrow in relation to the portfolio size, and so on

2.False,Money market mutual funds offer a convenient parking place for cash reserves when an investor is not quite ready to make an investment or is anticipating a near-term cash outlay for a non-investment purpose. Money market mutual funds offer ultimate safety and liquidity.

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3. True, A smaller bid-ask spread means that the dealer will realize a lower profit , Since if ask rate is high profit will increase.

4.False,A secondary market is a market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The national exchanges - such as the New York Stock Exchange and the NASDAQ are secondary markets4

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