1. Most investors are risk averse which means: A. they will always invest in the investment with the lowest possible risk. B. they actively seek to minimize their risks. C. they avoid the stock market due to the high degree of risk. D. they will assume more risk only if they are compensated by higher expected return.

2. It is not important to have a secondary market for mutual funds because: A. investors sell their shares back to the company. B. investors hold the securities till maturity. C. banks will cash their shares as long as they have accounts at the bank. D. investors trade between themselves.