FIN 534 RANK Imagine Your Future /fin534rank.com FIN 534 RANK Imagine Your Future /fin534rank.com | Page 44

1) Households reduce their consumption and increase their savings
2) The Federal Reserve decides to try to stimulate the economy.
3) There is a decrease in expected inflation
4) The economy falls into a recession
5) Most businesses decide to modernize and expand their manufacturing
capacity, and to install new equipment to reduce labor costs
Question 11
Which of the following statements is CORRECT?
1) Hedge funds are legal in Europe and Asia, but they are not permitted
to operate in the United States
2) Hedge funds have more in common with commercial banks than with
any other type of financial institution
3) Hedge funds have more in common with investment banks than with
any other type of financial institution
4) Hedge funds are legal in the United States, but they are not permitted
to operate in Europe or Asia
5) The justification for the "light" regulation of hedge funds is that only
"sophisticated" investors with high net worths and high incomes are
permitted to invest in these funds, and such investors supposedly can do
the necessary "due diligence" on their own rather than have it done by
the SEC or some other regulator