Question 1

It is estimated that 75 percent of all hedge funds are located in

Accepted Answer

A) Bermuda. 
B) Hong Kong. 
C) Cayman Islands. 
D) Luxembourg. 
E) San Marino. 
A) Bermuda. 
B) Hong Kong. 
C) Cayman Islands. 
D) Luxembourg. 
E) San Marino.

Question 2

In 2015 there were approximately _______ exchange traded funds (ETFs) in existence with combined assets valued at _______.

Accepted Answer

A) 510; $1.20 trillion 
B) 1,550; 2.0 trillion 
C) 860; $294 billion 
D) 1,220; $960 billion 
E) 1,970; $1.64 trillion 
A) 510; $1.20 trillion 
B) 1,550; 2.0 trillion 
C) 860; $294 billion 
D) 1,220; $960 billion 
E) 1,970; $1.64 trillion

Question 3

A mutual fund that charges investors a fee similar to a commission charge is called a

Accepted Answer

A) 12b-1 fee. 
B) no-load fund. 
C) load fund. 
D) long-term fund. 
E) short-term fund. 
A) 12b-1 fee. 
B) no-load fund. 
C) load fund. 
D) long-term fund. 
E) short-term fund.

Question 4

Which of the following is the primary regulator (s) of mutual funds?

Accepted Answer

A) Federal Reserve. 
B) SEC. 
C) NASD. 
D) State regulators. 
E) Stock exchanges. 
A) Federal Reserve. 
B) SEC. 
C) NASD. 
D) State regulators. 
E) Stock exchanges.

Question 5

The short-term mutual fund sector includes

Accepted Answer

A) money market mutual funds. 
B) hybrid funds. 
C) equity funds. 
D) bond funds. 
E) tax-exempt municipal bond funds. 
A) money market mutual funds. 
B) hybrid funds. 
C) equity funds. 
D) bond funds. 
E) tax-exempt municipal bond funds.

Question 6

Since 2002, the amount of assets invested in load funds have exceeded those invested in no-load funds.

Accepted Answer

A) True 
 B)False

Question 7

The Investment Advisors Act of 1940 sets out rules to prevent conflicts of interest, fraud, and excessive fees or charges for mutual fund shares.

Accepted Answer

A) True 
 B)False

Question 8

Historical evidence indicates that load funds perform better than no-load funds.

Accepted Answer

A) True 
 B)False

Question 9

Closed-end investment companies

Accepted Answer

A) have a variable number of shares based on demand. 
B) can trade at a price that is greater than, equal to, or less than the NAV. 
C) will trade at a different price as the number of shares of the fund changes. 
D) issues shares that cannot be sold; hence the term "closed." 
E) .will repurchase shares when investors want to sell. 
A) have a variable number of shares based on demand. 
B) can trade at a price that is greater than, equal to, or less than the NAV. 
C) will trade at a different price as the number of shares of the fund changes. 
D) issues shares that cannot be sold; hence the term "closed." 
E) .will repurchase shares when investors want to sell.

Question 10

Equity mutual funds may contain common stock, but not preferred stock.

Accepted Answer

A) True 
 B)False

Question 11

Short-term mutual funds invest solely in tax-exempt securities.

Accepted Answer

A) True 
 B)False

Question 12

To be deemed "accredited" and able to invest in a hedge fund, an investor must have

Accepted Answer

A) a net worth of over $2 million. 
B) an annual income of at least $200,000. 
C) an annual income of at least $500,000 if married. 
D) a net worth of over $4 million. 
E) a retirement savings plan and over $1 million in net worth. 
A) a net worth of over $2 million. 
B) an annual income of at least $200,000. 
C) an annual income of at least $500,000 if married. 
D) a net worth of over $4 million. 
E) a retirement savings plan and over $1 million in net worth.

Question 13

The SEC requires that prospectuses or advertisements regarding a mutual fund contain information that returns of the mutual fund carry some risk.

Accepted Answer

A) True 
 B)False

Question 14

When an investor purchases shares in an exchange traded fund (ETF), he or she is interacting directly with the fund.

Accepted Answer

A) True 
 B)False

Question 15

U.S.mutual fund companies have made significant progress in entering Japan and Europe.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following observations is true of a no-load fund?

Accepted Answer

A) Purchase is subject to a sales charge. 
B) Sales charges may be as high as 8.5 percent. 
C) They market shares of the fund directly to investors. 
D) They use sales agents. 
E) They have up-front commission charges. 
A) Purchase is subject to a sales charge. 
B) Sales charges may be as high as 8.5 percent. 
C) They market shares of the fund directly to investors. 
D) They use sales agents. 
E) They have up-front commission charges.

Question 17

The return from investing in mutual funds can include dividends, gains from the sale of the mutual fund assets, and gains from the sale of the mutual fund shares.

Accepted Answer

A) True 
 B)False

Question 18

For individual investors purchasing exchange traded funds (ETFs), which of the following is the most important entity that plays a key role in the primary market for ETF shares?

Accepted Answer

A) Authorized participants (APs) that interact with the ETF directly 
B) Managers of the ETF assets 
C) Market exchange officials overseeing trading in the ETF 
D) The National Association of Securities Dealers (NAS
D)  that clears the trade 
E) The specialist that records the trade 
A) Authorized participants (APs) that interact with the ETF directly 
B) Managers of the ETF assets 
C) Market exchange officials overseeing trading in the ETF 
D) The National Association of Securities Dealers (NAS
D)  that clears the trade 
E) The specialist that records the trade

Question 19

A change from commercial bank deposits to money market mutual funds typically allows an investor to benefit from higher yields, but with the cost of losing deposit insurance coverage.

Accepted Answer

A) True 
 B)False

Question 20

Benefits of investing in an exchange traded fund (ETFI) rather than an open-ended, no-load index mutual fund include all of the following EXCEPT.

Accepted Answer

A) ability to buy or sell anytime during the trading day 
B) lower management fees 
C) ability to purchase on margin 
D) income tax-exempt status for capital gains 
E) ability to sell short 
A) ability to buy or sell anytime during the trading day 
B) lower management fees 
C) ability to purchase on margin 
D) income tax-exempt status for capital gains 
E) ability to sell short

Exam 5: Financial Services: Mutual Funds and Hedge Funds

It is estimated that 75 percent of all hedge funds are located in

In 2015 there were approximately _______ exchange traded funds (ETFs) in existence with combined assets valued at _______.

A mutual fund that charges investors a fee similar to a commission charge is called a

Which of the following is the primary regulator (s) of mutual funds?

The short-term mutual fund sector includes

Since 2002, the amount of assets invested in load funds have exceeded those invested in no-load funds.

The Investment Advisors Act of 1940 sets out rules to prevent conflicts of interest, fraud, and excessive fees or charges for mutual fund shares.

Historical evidence indicates that load funds perform better than no-load funds.

Closed-end investment companies

Equity mutual funds may contain common stock, but not preferred stock.

Short-term mutual funds invest solely in tax-exempt securities.

To be deemed "accredited" and able to invest in a hedge fund, an investor must have

The SEC requires that prospectuses or advertisements regarding a mutual fund contain information that returns of the mutual fund carry some risk.

When an investor purchases shares in an exchange traded fund (ETF), he or she is interacting directly with the fund.

U.S.mutual fund companies have made significant progress in entering Japan and Europe.

Which of the following observations is true of a no-load fund?

The return from investing in mutual funds can include dividends, gains from the sale of the mutual fund assets, and gains from the sale of the mutual fund shares.

For individual investors purchasing exchange traded funds (ETFs), which of the following is the most important entity that plays a key role in the primary market for ETF shares?

A change from commercial bank deposits to money market mutual funds typically allows an investor to benefit from higher yields, but with the cost of losing deposit insurance coverage.

Benefits of investing in an exchange traded fund (ETFI) rather than an open-ended, no-load index mutual fund include all of the following EXCEPT.

Why Are Financial Institutions Special

Financial Services: Depository Institutions

Financial Services: Finance Companies

Financial Services: Securities Brokerage and Investment Banking

Financial Services: Insurance

Risks of Financial Institutions

Interest Rate Risk I

Interest Rate Risk II

Credit Risk: Individual Loan Risk

Credit Risk: Loan Portfolio and Concentration Risk

Liquidity Risk

Foreign Exchange Risk

Sovereign Risk

Market Risk

Off-Balance-Sheet Risk

Technology and Other Operational Risks

Fintech Risks

Liability and Liquidity Management

Deposit Insurance and Other Liability Guarantees

Capital Adequacy

Product and Geographic Expansion

Futures and Forwards

Options, Caps, Floors, and Collars

Swaps

Loan Sales

Securitization

Filters

In 2015 there were approximately _ exchange traded funds (ETFs) in existence with combined assets valued at _.