Who Accepts All of the Risk Associated with a Mutual

question 23

Multiple Choice

Who accepts all of the risk associated with a mutual fund's portfolio of stocks and/or bonds?

• A)the fund's managers
• B)the fund's shareholders
• C)the federal government
• D)the corporations that originally issued the stocks and/or bonds held by the fund

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Definitions:

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price in a given period.

Price Floor

A minimum legal price below which a product cannot be sold; to have an impact, a price floor must be set above the equilibrium price.

Surplus

A situation where the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Substitution Effect

The economic concept that as prices rise (or incomes decrease), consumers will replace more expensive items with cheaper alternatives, holding utility constant.