Question A:

Some major private credit funds - including those offered by BlackRock, Cliffwater and Morgan Stanley - have maintained their redemption limits, not fully filling all investor requests.

The enforcement of restrictions on withdrawals from private credit funds predicts that the funds will substantially underperform indices of liquid high-yield corporate bonds over the next 18 months.

Question B: Assets in the private credit funds that are restricting withdrawals are substantially overvalued relative to their true market value.

Interest-bearing stablecoins, either via direct issuer payments or exchange-provided rewards, would measurably erode the deposit franchise of banks in developed-market economies.

Question A: Having the government-sponsored housing agencies Fannie Mae and Freddie Mac buy $200 billion in mortgage-backed securities would reduce mortgage rates by more than 25 basis points.

Question B: Having the government-sponsored housing agencies Fannie Mae and Freddie Mac buy $200 billion in mortgage-backed securities would measurably improve the affordability of home ownership.

Question C: Restrictions on large institutional investors buying single-family homes would measurably improve the affordability of home ownership.

Question A: The proposed Trump Accounts (https://trumpaccounts.gov/) will provide an initial savings deposit of $1,000 from the US Treasury to eligible children born between 2025 and 2028, and allow up to $5,000 a year in additional private contributions.

The proposed Trump Accounts will substantially improve long-term wealth accumulation.

Question B: The proposed Trump Accounts will substantially reduce income inequality among future generations.

Question C: The proposed Trump Accounts will substantially increase support for free-market capitalism over socialism.

The proposed reduction in the enhanced supplementary leverage ratio (SLR) for U.S. banks, without offsetting changes to other capital or liquidity requirements, would not substantially increase systemic risk in the U.S. banking system.

Question A: The two major proxy advisory firms – Glass Lewis and Institutional Shareholder Services – have announced their intention to offer multiple perspectives to clients rather than single voting recommendations – see, for example: https://www.ft.com/content/7860f94c-7b1c-49c9-9f4c-a561ee39ee31

Proxy advisory firms that provide general guidance on corporate governance, diversity and environmental practices will create measurably more shareholder value for investor clients than proxy advisory firms that provide specific voting recommendations.

Question B: Companies that scale back on their diversity, equity, and inclusion initiatives are likely to see a measurable improvement in their corporate value and performance.

Question A: U.S. government ownership of equity stakes in U.S. companies is measurably detrimental to corporate performance.

Question B: U.S. government ownership of equity stakes in U.S. companies is substantially detrimental to good corporate governance.

Question A: A substantial loss of Federal Reserve independence would substantially increase the overall nominal cost of U.S. government borrowing.

Question B: A substantial loss of Federal Reserve independence would substantially raise risk premia on long-term U.S. government debt.

Question A: The markets for consumer and business payment services would be substantially more efficient if payments by stablecoins (privately issued digital tokens pegged to a fiat currency) became an accepted alternative to traditional payments.

Question B: Ten years from now, stablecoins will account for a substantial share of payment flows and deposits in the global banking system.

Question A:

The nature of the Trump administration's 'golden share' agreement with Nippon Steel over the acquisition of US Steel has been summarized on X by the US secretary of commerce: https://x.com/howardlutnick/status/1933924525265043774


The approval of Nippon Steel's acquisition of US Steel will be substantially positive for jobs and investment in the US steel industry.

Question B: Government power over an acquired company's operational and governance matters, as in the US government's golden share in US Steel, is a substantial constraint on effective management of the company.

Question C: The precedent of the golden share arrangement in the US Steel deal will be a substantial deterrent to foreign investors in American companies.

The recent downgrade of the U.S. sovereign credit rating reflects a measurable probability that an investor in U.S. Treasury securities would not be paid in full in nominal terms.

Question A: Under current policies on climate change, the associated physical risks (such as those arising from total seasonal rainfall and sea level changes, and increased frequency, severity, and correlation of extreme weather events) will be at most a very small factor in monetary policy decisions over the next decade.

Question B: The physical risks associated with climate change under current policies are likely to threaten financial stability over the next decade.

Question A: Foreign demand for US treasury securities results in substantially lower interest rates on these instruments.

Question B: The recent volatility in Treasury market prices is primarily due to concerns about US macroeconomic prospects.

Question A: The US dollar's status as the dominant reserve currency substantially raises its value.

Question B: US-led policy interventions that discouraged central banks from holding US treasury securities would substantially diminish the dollar's reserve currency status.

Question C: US-led policy interventions that led to a sustained weakening in the dollar would substantially damage the US government's ability to finance its deficits.

Question A: A bipartisan bill to cap credit card interest rates at 10% has been introduced recently in the House and the Senate: https://ocasio-cortez.house.gov/media/press-releases/ocasio-cortez-luna-introduce-bill-cap-credit-card-interest-rates-10

Capping credit card interest rates at 10% would make most users measurably better off.

Question B: Capping credit card interest rates at 10% would lead to a substantial reduction in access to credit for low-income borrowers.

Giving the White House more direct influence over the decisions of the financial regulatory agencies would substantially improve financial stability.

Question A: Central banks' international reserves portfolios would have substantially lower risk if they were to hold a substantial portion of their reserves in crypto assets.

Question B: The US economy would benefit substantially by borrowing money to form a strategic crypto asset reserve fund.

Question A: California's insurance industry regulator issued statements shortly before and shortly after the recent wildfires started (on December 30, 2024, and January 9, 2025):
https://www.insurance.ca.gov/0400-news/0100-press-releases/2024/release065-2024.cfm

https://www.insurance.ca.gov/0400-news/0100-press-releases/2025/release005-2025.cfm

In the face of growing wildfire risks, price caps on insurance premiums have substantially reduced the viability of private property insurance markets in California.

Question B: A mandatory one-year moratorium on insurance non-renewals and cancellations would lead to a substantial longer-term reduction in the supply of private home insurance products and the number of households that are insured against catastrophic risk in areas of California affected by recent wildfires.

A properly diversified 401k account should include private equity and private credit assets.

Question A: In general, absent any proprietary information, a retail equity investor cannot consistently make accurate predictions about whether the price of an individual stock will rise or fall on a given day.

Question B: In general, absent any proprietary information, a retail equity investor can expect to do better by holding a well-diversified, low-fee, passive index fund than by holding a few stocks.

Question A: Establishing a sovereign wealth fund to invest in domestic infrastructure, emerging technologies, and/or strategic sectors would bring substantial benefits to the US economy over a ten-year horizon.

Question B: For the US, establishing a sovereign wealth fund would be substantially better for citizens relative to reducing public debt burdens.

Question A: A bitcoin's value derives from the belief that others will want to use it, which implies that its purchasing power is likely to fluctuate over time to a degree that will limit its usefulness.

Question B: A substantial source of the value of unbacked decentralized private cryptocurrencies, such as Bitcoin, arises from their convenience for use in illegal activities.

Question C: A properly diversified portfolio should include crypto assets.

Question A: The trend of consolidation in the US banking sector will lead to fewer, but more profitable, mega-banks with over $250 billion in assets dominating the market.

Question B: The current liquidity and capital regulations are inadequate to address run risks of banks in a digital era.

It is appropriate advice for retail investors to tilt their portfolio away from the market portfolio towards factors that have been identified in the academic literature to earn positive abnormal returns relative to the Capital Asset Pricing Model.

Question A:

Stock markets around the world have seen an increasing concentration of trades in or near the closing auction. In the US, for example, about a third of all S&P 500 stock trades are now executed in the final ten minutes of the session, up from 27% in 2021.

The increased concentration of trading in the final minutes of the trading day has a measurably detrimental effect on market quality.

Question B: Strict indexing implemented with trading at the close to avoid tracking error creates a measurable performance drag that could be avoided with more flexible passive strategies.

Question A: Public companies that pursue social and environmental initiatives bear no measurable costs (in terms of lower profits) relative to similar companies that do not pursue such initiatives.

Question B: Public companies that pursue social and environmental initiatives benefit from a measurably lower cost of capital than similar companies that do not pursue such initiatives.

Question C: There are substantial social benefits when managers of public companies make choices that account for the impact of their decisions on customers, employees, and community members beyond the effects on shareholders.

Question A: The lower willingness of private firms to go public, combined with the increased number of publicly traded firms being taken private over the last 25 years, is measurably net negative for economic growth.

Question B: All else equal, reducing regulatory barriers (including reporting requirements such as Sarbanes Oxley 404) to public listing would substantially increase the share of publicly traded firms in the economy.

Question C: The lack of transparency about unlisted private firms' financial performance substantially hinders the efficiency of the allocation of capital.

Question A: Letting publicly traded firms report earnings annually rather than quarterly would lead their executives to place more weight on long-term issues in their investments and other decisions.

Question B: A switch from quarterly to annual earnings reports would, on net, benefit shareholders.

Question A: It seems likely that Japanese authorities intervened in the foreign exchange market recently to prop up the yen – see, for example: https://www.ft.com/content/455784ec-0465-46ee-8c73-fc5ce3e31c37. In such circumstances, intervention refers to purchases or sales of domestic or foreign currency without changing the monetary policy stance.

Large-scale intervention by public authorities in currency markets can move exchange rates substantially.

Question B: The effectiveness of foreign exchange interventions can last beyond one month.

Retail investors account for a large share of global wealth, but a small share in private equity holdings. (see link: https://bain.com/insights/why-private-equity-is-targeting-individual-investors-global-private-equity-report-2023/)

A reduction in the barriers to all retail investors investing in private equity funds - notably regulatory restrictions on investor wealth/income and on liquidity - would substantially improve household welfare.

Regulator Probes BlackRock and Vanguard Over Huge Stakes in U.S. Banks – The WSJ reports that ‘The FDIC is scrutinizing whether the index-fund giants are sticking to passive roles when it comes to their investments in U.S. banks.’

The exemption of passive asset managers from banking rules - such as needing permission when they acquire shares above the 10% threshold - generates measurable risks to the accomplishment of the FDIC's mission.

Question A: Allowing short selling of financial securities, such as stocks and government bonds, leads to prices that, on average, are closer to their fundamental values.

Question B: When short sellers start to establish substantial short positions in a stock, the stock is likely to have been overvalued.

Question C: Requiring investors to disclose short positions in a stock at the equivalent threshold as they are required to do for long positions would improve the informativeness of stock prices.

With some measures of concentration by market capitalization within broad US stock market indices at an all-time high, investors seeking a well-diversified passive equity portfolio should consider alternatives to market-cap-weighted indices.

Tesla shareholders are likely to benefit substantially from the decision by the Delaware Court of Chancery to void Elon Musk's $56 billion remuneration package.