What features of mutual funds and the investment environment have led to mutual funds'rapid growth in the last two decades? What types of ethical factors must an investmentadvisor consider when recommending different types of mutual fund investments to aclient?(Objective 7.1)Mutual Funds initial period of rapid growth was around 1974 and early 1975, andprimarily resulted because of Regulation Q's ceiling on the interest rates that insuredfinancial depository institutions could to pay to on deposit accounts. During this timemutual fund rates rose above the interest rates paid on deposits accounts. In response tothis growth with rates surround mutual funds, customers withdrew their money fromtraditional deposit accounts and placed their funds into mutual fund accountsThe level of mutual fund assets almost reached $4 billion by mid-1975 and assetsstayed constant around $3 billion to $4 billion until the end of 1977. Explosive growth inMMFs occurred again in the late 1970s and early 1980s, when very high money marketrates produced large differences in the rates of return being paid by mutual funds andfinancial deposit institutions. Also beginning in the late 1970s, a few of the largest firmsintroduced the "cash management account" (CMA), a type of MMF that includes check-writing features. CMA accounts provided customers with both market-sensitive yieldsand the transactional advantages of a checking account, and as a result mutual fund assetsrose rapidly from $4 billion in 1977 to $235 billion in 1982.Moreover, "investors often use mutual funds as a parking place for cash reservesawaiting investment in longer-term financial assets such as stocks and bonds. They alsofrequently exchange mutual fund shares for the shares of other funds in their mutualfunds group. Mutual funds generally are the core vehicle in the popular cash managementaccounts offered by large brokerage firms.