What Percent of Mutual Funds Within Each Category Receive a 5-Star

question 64

Multiple Choice

What percent of mutual funds within each category receive a 5-star rating from Morningstar?

• A) 5
• B) 10
• C) 15
• D) 20
• E) 25

---

Definitions:

Asymmetric Information

A situation where one party in a transaction has more or better information than the other, leading to an imbalance in power and potentially unfair outcomes.

Hidden Action

A situation in which an agent's actions are not fully observable by the principal, potentially leading to moral hazard.

Moral Hazard

A situation where one party engages in risky behavior knowing that it is protected against the consequences, often due to an asymmetry of information or a misalignment of incentives.

Imperfectly Monitored

A situation where there is insufficient oversight or observation, often leading to non-compliance or deviation from expected standards.