Studies have shown that indexed funds can produce higher returns than managed funds; this is evidence in support of:

Question 13 options:

A)	a random walk.

B)	the efficient markets hypothesis.

C)	the effectiveness of adaptive expectations.

D)	rational exuberance.

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Question 14 (2 points)

Since the banking crisis of the mid-1980s, many economists believe that some banks have become:

Question 14 options:

A)	essential to preventing another financial crisis.

B)	too big to fail.

C)	monopolies.

D)	important community lenders.

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Question 15 (2 points)

Because gathering information is costly, when many people buy the same stock ________ arise(s).

Question 15 options:

A)	the free-rider problem

B)	irrational exuberance

C)	adverse selection

D)	pecuniary externalities

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Question 16 (2 points)

Which of the following can be considered as "direct finance"?

Question 16 options:

A)	Your friend gets a car loan from the local bank.

B)	You buy $3000 worth of Intel bonds.

C)	You deposit $4000 in your savings account.

D)	You take out a mortgage loan at a bank.

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Question 17 (2 points)

To reduce information asymmetries in financial market, we can use:

Question 17 options:

A)	boards of directors.

B)	bond-rating agencies.

C)	investment banks.

D)	All of the answers are correct.