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

question 31

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.

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Definitions:

Credit

An accounting entry that increases liability or equity accounts, or decreases asset or expense accounts.

Underapplied Manufacturing Overhead

A situation where the actual manufacturing overhead costs are higher than the overhead costs applied to products based on the predetermined overhead rate.

Overapplied Manufacturing Overhead

Occurs when the allocated manufacturing overhead costs are more than the actual overhead costs incurred.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet.