Professional Management Spells Safety,because an Occasional Loss Incurred with One

question 81

True/False

Professional management spells safety,because an occasional loss incurred with one bond issue is usually offset by gains from other bond issues in the fund's portfolio.

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Definitions:

Adverse Selection

A situation in insurance and finance where those most likely to produce negative outcomes are more inclined to select into or engage with a service, typically leading to higher costs for insurers or lenders.

Moral Hazard

The situation in which one party takes additional risks because they know they will not bear the full consequences of their actions.

Adverse Selection

A situation where sellers have more information than buyers, leading to high-quality goods and services being squeezed out of the market because they cannot be adequately priced.

Private Information

Information that some people have, but others do not.