Question
Choose all the answers. 64. (2 points) All else equal, mutual funds managed by individuals with foreign-sounding names have: (a) Lower fund flows. (b) Greater
Choose all the answers.
64. (2 points) All else equal, mutual funds managed by individuals with foreign-sounding names have: (a) Lower fund flows. (b) Greater outflows following bad performance. (c) Smaller inflows following good performance. (d) Superior performance. (e) Higher volatility. 18
65. (2 points) Arbitrage forces may not fully absorb retail investors correlated demand shocks because: (a) Arbitrageurs have limited capital. (b) Arbitrageurs have limited time-horizon. (c) Arbitrageurs have institutional constraints. (d) Arbitrage can be risky.
66. (2 points) When there are limits to arbitrage, correlated noise trading can: (a) Generate comovement in stock returns. (b) Generate mispricing. (c) Make arbitrage risky. (d) Make arbitrage less effective.
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