Part I. [30pts] For Problems 1 through 10, answer whether or not the statement is True (T) or False (F). Briey justify your answer. Problem 1. (3pt) Hedge fund is a special sort of mutual fund. Problem 2. (3pt) ETFs are not involved with active investment strategies. Problem 3. (3pt) Most mortgage loans once had balloon payments; now most current mortgage loans fully amortize. Problem 4. (3pt) In the bond market, the bond supply is more sentitive to negative macroeconomic shocks than the bond demand. Problem 5. (3pt) The stock market crash of 1929 made almost zero impact on mutual fund industry because the main eect was on the stock market and not on the mutual fund market. 3 Problem 6. (3pt) New issuances in bonds were typically more than the new issuances of stocks during the past 30 years. Problem 7. (3pt) In the long run, stock market indexes grow as the GDP growth and ination. Problem 8. (3pt) Stocks and bonds are two of the most important source of external nancing for businesses. Problem 9. (3pt) The mortgate interest rate has fallen during the last 30 years as the long-term treasury rates fell. Problem 10. (3pt) The Investment Company Act of 1940 reinvigorated the mutual fund industry by providing government deposit guarantee for the mutual funds which is similar to that of FDIC.