The Securities and Exchange Commission of the U.S. government ...

[lbcchick]

The Securities and Exchange Commission of the U.S. government requires that mutual fund companies publish a long and detailed prospectus which covers an array of areas including the cost of owning the fund, the types of stocks the fund invests in,
 
  the management fee, administrative fees and an assessment of the type of risk that holding the fund represents. This is clearly designed with the intent of mitigating the imperfect information problem. However, can you think of any reason why the value of these documents is likely to be quite marginal?

Question 2

In 1991, Argentina decided to peg its currency (the Argentinean peso) to the U.S. dollar. Most of Argentina's trading, however, was with Brazil and Europe, not the United States. What result would pegging the Argentinean peso to the U.S.
 
  dollar have on the cost of imports from and exports to Brazil and Europe?

[robbielu01]

Answer to Question 1

First of all, just because they require mutual funds to publish a prospectus is no guarantee that investors will actually read it. Second, even if they do read it investors may not understand much of the material given that many people may lack personal finance knowledge.

Answer to Question 2

If Argentina pegs its currency to the dollar, the prices of the goods it purchases and the prices of the goods it sells to foreign countries will be determined by the value of the dollar. If the value of the dollar is rising relative to the euro and the Brazilian real, then Argentinean goods are also rising in price. The result will be a decrease in Argentinean exports to foreign countries (and an increasing current account deficit, as Argentina discovered).