The Theory Behind the Mutual Fund Cash Ratio Is

Multiple Choice

The theory behind the mutual fund cash ratio is

A) mutual fund managers hold high levels of cash when they are optimistic about market conditions.
B) when mutual fund managers hold high levels of cash, they must eventually buy stocks with it.
C) when mutual fund managers hold low levels of cash they are pessimistic about market conditions.
D) when market conditions are favorable, shareholders remit more cash than the managers can invest.