Mutual Funds Traditionally Keep a Small Percentage of Their Funds

question 16

Multiple Choice

Mutual funds traditionally keep a small percentage of their funds in highly liquid assets such as bank CDs, since some shareholders may want to redeem shares on any given day. What percentage of total assets is typically held in a very liquid form?

• A)25%
• B)20% to 25%
• C)10% to 12%
• D)4% to 6%

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Definitions:

Positive Reinforcement

The process of increasing the likelihood of a behavior by following it with a pleasant or rewarding stimulus.

Conditioned

Refers to a behavior or response that has been learned or acquired through association with an environmental stimulus.

Frequency

The rate at which something occurs over a particular period of time or in a given sample.

Forgetting

A decrease in a response as a result of not being able to display it over time. Forgetting involves preventing a response from occurring for some period after it has been conditioned.