Question: 1. How have economies of scale affected concentration of large mutual fund complexes in the mutual fund industry? How have economies of scope affected the configuration of products offered by funds in the industry?
2. Why do you suppose the money market mutual fund industry is dominated by funds that use amortized cost pricing of their shares (over those that mark their portfolios to market)? Why are amortized cost funds more vulnerable to swings in investor demand?
3. Describe how hedge funds create economic value. Does this help or hinder the goals of monetary policy? How could they cause financial instability?