22 The problem of adverse selection A. B. C. D. E. implies that many people who do not need insurance coverage have it through group plans. means that those people who apply for insurance are the least likely to need insurance coverage. causes insurance underwriters to alter the health statistics of the general population when determining appropriate premiums. does not exist in the insurance industry. creates a savings element along with the insurance component of the premium and policy. 23 The market-making function of investment banking can be described as . A B. market makers take inventory positions to stabilize the market in the securities. Answers A and C only. agency transactions are two-way transactions on behalf of customers, such as a dealer working for a fee or commission. agency transactions are when market makers take long or short positions and seek profits on price movements. a 24 Which of the following observations concerning hedge funds is NOT true? A. B. They are pooled investment vehicles. Historically, they were subject to virtually no regulatory oversight. Historically, they were not required to register with the SEC. They have to disclose their activities to third parties. They usually take significant risk. 25 An open-ended fund has stocks of three companies: 200 shares of IBM currently valued at $50.00, 100 shares of GE currently valued at $20 and 100 shares of Digital currently valued at $30. The fund has 500 shares outstanding. What is the net asset value (NAV) of the fund? A. B. C. D. E. $120.00. $12.00. $37.50. $60.00. $30.00