Which one of the following statements is correct concerning the mutual fund cash ratio (MFCR)?
A) The lower the value of the MFCR, the stronger the market will be in the future.
B) The MFCR is equal to the cash inflows into money market funds divided by the cash flows out of money market funds.
C) A low MFCR indicates that fund managers might be forced to sell securities should investors wish to withdraw funds.
D) A MFCR greater than 12% is considered a bearish signal.

Question

Quizplus · Accepted Answer

The mutual fund cash ratio (MFCR) indicates the percentage of a mutual fund's assets held in cash. A low MFCR suggests that fund managers have invested a large portion of their assets, leaving less cash available. This could lead to the selling of securities if there are significant withdrawals, as they might not have enough cash to cover these without selling investments.

Which One of the Following Statements Is Correct Concerning the Mutual