In the Event of Financial Distress, Open-Ended Mutual Fund Investors

question 7

Multiple Choice

In the event of financial distress, open-ended mutual fund investors

• A)have an incentive to cash in their shares quickly since they are paid on a first come, first served basis.
• B)have an incentive to avoid a run since that will deplete the fund net asset value.
• C)have an incentive to cash in their shares quickly since that will increase the fund's net asset value.
• D)will switch into low risk bank deposits.
• E)have an incentive to avoid a run since the Federal Reserve guarantees mutual fund holdings.

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