The Boston Fed Enters the Active vs. Passive Debate

The Boston Fed Enters the Active vs. Passive Debate

Assessment

Interactive Video

Business

University

Hard

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The video discusses the shift from active to passive investing, highlighting its effects on liquidity, redemption risks, and market volatility. It examines how passive investing reduces certain risks but may increase others, such as market volatility due to leveraged ETFs. The concentration of assets in large firms like Vanguard and BlackRock is also addressed, noting potential systemic risks.

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7 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What has been a significant trend in asset management over the past decades?

A decline in mutual fund popularity

An increase in hedge fund investments

A shift from passive to active investing

A shift from active to passive investing

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How do ETFs contribute to reducing liquidity and redemption risks?

By allowing in-kind transactions

By promoting daily rebalancing

By decreasing the number of securities

By increasing the number of active investors

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a potential downside of some exchange-traded products?

They always track the market perfectly

They can contribute to increased market volatility

They are immune to market fluctuations

They reduce the number of available stocks

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What percentage of ETF assets do leveraged and inverse ETFs represent?

About 25%

About 2%

About 50%

About 10%

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a concern related to the concentration of assets in firms like Vanguard and BlackRock?

They have no impact on the market

They could increase market stability

They could lead to a duopoly

They reduce investment opportunities

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the potential risk if a large asset manager experiences an idiosyncratic shock?

It could have no effect on the market

It could lead to broader spillover effects

It could stabilize the market

It could only affect small investors

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the combined asset value of Vanguard and BlackRock?

$8 trillion

$20 trillion

$12 trillion

$5 trillion