Chapter 15 - Selecting a Mutual Fund
Highest to lowest risk:
Balanced funds
Real estate funds
Specialty funds
Mortgage funds - correct answer ✔Specialty funds
Real estate funds
Balanced funds
Mortgage funds
Highest to lowest risk all funds: SREDBBMM - correct answer ✔Specialty
Funds
Real Estate Funds
Equity Funds
Dividend Funds
Balanced Funds
Bond Funds
Mortgage Funds
Money Market Funds
What type of risk is described by sensitivity of a security's price to new
information leading to changes in demand? - correct answer ✔Unique risk
(also called Specific risk)
Your client is interested in reducing the potential for default risk (The unique
risk that a bond coupon will not be paid) in her fixed-income portfolio. What
, would you recommend to your client? - correct answer ✔Avoid specializing
in corporate bonds
Your client is looking for ways to eliminate systematic risk (Market risk (also
called systematic risk)). What strategy is there that you can recommend that
eliminates systematic risk? - correct answer ✔There are no strategies
available
What type of risk is described by changes in the overall market affecting an
entire class of securities? - correct answer ✔Market risk (also called
systematic risk)
Unique risk (also called Specific risk) - correct answer ✔Sensitivity of a
security's price to new information leading to changes in demand
Can be reduced with diversification
Default risk - correct answer ✔The unique risk that a bond coupon will not be
paid
Reduced by avoiding specializing in corporate bonds
Market risk (also called systematic risk) - correct answer ✔Changes in the
overall market affecting an entire class of securities
No ways to reduced risk
Exchange rate risk - correct answer ✔Changes in the relative value of the
currencies of the countries of investment
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Academia199. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.99. You're not tied to anything after your purchase.
