A Fund Which Invests in Companies That Are in or Close

question 8

Multiple Choice

A fund which invests in companies that are in or close to bankruptcy is called:

• A)a short/long bias fund.
• B)a market neutral fund.
• C)a distressed fund.
• D)a sloan funD.Distressed funds can invest in any type of distressed security,including common stock,preferred stock,or debt.Companies with distressed securities are usually in bankruptcy,or close to bankruptcy,and in need of legal action.The fund manager thinks there will be some value after the bankruptcy and after creditors have been paid,and that the market is not valuing the security accurately.

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Definitions:

Conformity

The act of matching attitudes, beliefs, and behaviors to what is considered normal within a group or society.

Social Psychologists

Researchers who study how individuals' thoughts, feelings, and behaviors are influenced by the actual, imagined, or implied presence of others.

Orders

Directions or instructions that dictate a specific action or response to be taken.

Influencing Conformity

The process by which individuals adjust their behaviors, attitudes, or beliefs to match those of a group or to meet group standards.