Part 1Mutual funds' rapid growth in the last three decades can be, in part, attributed to the A. then-booming stock market and the specialization in debt instruments. B. flight from the stock market and the specialization in debt instruments. C. increased wealth of investors. D. relaxation of standards related to mutual funds.

Question

Part 1Mutual​ funds' rapid growth in the last three decades can​ be, in​ part, attributed to the A. ​then-booming stock market and the specialization in debt instruments. B. flight from the stock market and the specialization in debt instruments. C. increased wealth of investors. D. relaxation of standards related to mutual funds.

BlackTom AI · Accepted Answer

Let's examine the four statements and connect them to what typically drives mutual funds' rapid growth over the past few decades.
Option A: 'then-booming stock market and the specialization in debt instruments.' While a strong stock market can attract assets, mutual funds grew for multiple reasons beyond just a booming market, and specialization in debt instruments would more directly relate to bond funds rather than overall mutual fund growth. This option combines two elements, but it overemphasizes market timing and debt specialization as the primary driver. 
Option B: 'flight from the stock market and the specialization in debt instruments.' This would suggest investors were moving away from stocks into debt funds, which historically did occur at times, but it does not capture the broad, sustained growth pattern of mutual funds driven by more than just a shift in asset class preferences. It understates other enabling factors like wealth accumulation and overall market access. 
Option C: 'increased wealth of investors.' When investors experience greater wealth, they typically have more capital to invest, leading to larger fund inflows and rapid growth of mutual funds. This explanation aligns with the macro trend of rising personal wealth, retirement savings, and expanding investor participation, which collectively propelled mutual funds' growth across the period. 
Option D: 'relaxation of standards related to mutual funds.' Easing standards would matter, but there is limited evidence that a broad relaxation of standards singularly explains rapid growth. Even if standards became more permissive in some areas, the enduring driver is more plausibly the empowerment provided by greater investor wealth and expanded access to funds, rather than a wholesale relaxation alone. 
Overall, Option C best accounts for the widespread, sustained growth by highlighting the increased capacity of investors to place larger sums into mutual funds, which boosts asset bases and inflows across the industry. The other options either overstate a single market condition, describe a shift that does not fully explain growth, or rely on regulatory changes as the primary driver without tying them to broader wealth trends.

Homework:Chapter 13 Homework

View Explanation

Log in for full answers

Similar Questions

Mutual funds pool money from investors to purchase portfolios of investments.

A mutual fund is a diversified portfolio of stocks and/or bonds depending on what the manager has purchased.

Two advantages of investing in mutual funds are diversification and professional management.

One of the attractive features of mutual funds is that they offer small investors a diversified portfolio and professional management.

Mutual funds are often considered to be a good way to get started with medium-risk investments.

Which one of the following statements regarding open-end mutual funds is false?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler