Question 1

In 2018, the proportion of mutual funds (based on total assets) specializing in money market securities was

Accepted Answer

A)  21.7%. 
B)  28.0%. 
C)  54.1%. 
D)  73.4%. 
E)  15.2%. 
A)  21.7%. 
B)  28.0%. 
C)  54.1%. 
D)  73.4%. 
E)  15.2%. E

Question 2

Investors in closed-end funds who wish to liquidate their positions must

Accepted Answer

A)  sell their shares through a broker. 
B)  sell their shares to the issuer at a discount to net asset value. 
C)  sell their shares to the issuer at a premium to net asset value. 
D)  sell their shares to the issuer for net asset value. 
E)  hold their shares to maturity. 
A)  sell their shares through a broker. 
B)  sell their shares to the issuer at a discount to net asset value. 
C)  sell their shares to the issuer at a premium to net asset value. 
D)  sell their shares to the issuer for net asset value. 
E)  hold their shares to maturity. A

Question 3

A mutual fund had year-end assets of $750,000,000 and liabilities of $7,500,000. There were 40,000,000 shares in the fund at year end. What was the mutual fund's net asset value?

Accepted Answer

A)  $9.63 
B)  $18.56 
C)  $16.42 
D)  $17.87 
E)  $17.26 
A)  $9.63 
B)  $18.56 
C)  $16.42 
D)  $17.87 
E)  $17.26 B

Question 4

A mutual fund had NAV per share of $19.00 on January 1, 2018. On December 31 of the same year, the fund's NAV was $19.14. Income distributions were $0.57, and the fund had capital gain distributions of $1.12. Without considering taxes and transactions costs, what rate of return did an investor receive on the fund last year?

Accepted Answer

A)  11.26% 
B)  10.54% 
C)  7.97% 
D)  8.26% 
E)  9.63% 
A)  11.26% 
B)  10.54% 
C)  7.97% 
D)  8.26% 
E)  9.63%

Question 5

A mutual fund had average daily assets of $4.7 billion in 2018. The fund sold $2.2 billion worth of stock and purchased $3.6 billion worth of stock during the year. The fund's turnover ratio is

Accepted Answer

A)  37.5%. 
B)  22.6%. 
C)  15.3%. 
D)  46.8%. 
E)  20.7%. 
A)  37.5%. 
B)  22.6%. 
C)  15.3%. 
D)  46.8%. 
E)  20.7%.

Question 6

Assume that you purchased shares of a mutual fund at a net asset value of $10.00 per share. During the year, you received dividend income distributions of $0.05 per share and capital gains distributions of $0.06 per share. At the end of the year, the shares had a net asset value of $8.16 per share. What was your rate of return on this investment?

Accepted Answer

A)  −18.24% 
B)  −16.1% 
C)  16.10% 
D)  −17.3% 
E)  17.3% 
A)  −18.24% 
B)  −16.1% 
C)  16.10% 
D)  −17.3% 
E)  17.3%

Question 7

A mutual fund had year-end assets of $465,000,000 and liabilities of $37,000,000. If the fund NAV was $56.12, how many shares must have been held in the fund?

Accepted Answer

A)  4,300,000 
B)  6,488,372 
C)  8,601,709 
D)  7,626,515 
E)  None of these options are correct. 
A)  4,300,000 
B)  6,488,372 
C)  8,601,709 
D)  7,626,515 
E)  None of these options are correct.

Question 8

A mutual fund had NAV per share of $16.75 on January 1, 2018. On December 31 of the same year, the fund's rate of return for the year was 26.6%. Income distributions were $1.79, and the fund had capital gain distributions of $2.80. Without considering taxes and transactions costs, what ending NAV would you calculate?

Accepted Answer

A)  $17.44 
B)  $13.28 
C)  $14.96 
D)  $17.25 
E)  $16.62 
A)  $17.44 
B)  $13.28 
C)  $14.96 
D)  $17.25 
E)  $16.62

Question 9

A mutual fund had year-end assets of $700,000,000 and liabilities of $7,000,000. There were 40,150,000 shares in the fund at year end. What was the mutual fund's net asset value?

Accepted Answer

A)  $9.63 
B)  $57.71 
C)  $16.42 
D)  $17.87 
E)  $17.26 
A)  $9.63 
B)  $57.71 
C)  $16.42 
D)  $17.87 
E)  $17.26

Question 10

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the Nasdaq 100 should choose

Accepted Answer

A)  SPY. 
B)  DIA. 
C)  QQQ. 
D)  IWM. 
E)  VTI. 
A)  SPY. 
B)  DIA. 
C)  QQQ. 
D)  IWM. 
E)  VTI.

Question 11

Which of the following is not an advantage of owning mutual funds?

Accepted Answer

A)  They offer a variety of investment styles. 
B)  They offer small investors the benefits of diversification. 
C)  They treat income as "passed through" to the investor for tax purposes. 
D)  All of the options are advantages of mutual funds. 
E)  None of the options are an advantage of mutual funds. 
A)  They offer a variety of investment styles. 
B)  They offer small investors the benefits of diversification. 
C)  They treat income as "passed through" to the investor for tax purposes. 
D)  All of the options are advantages of mutual funds. 
E)  None of the options are an advantage of mutual funds.

Question 12

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the MSCI Japan Index should choose

Accepted Answer

A)  SPY. 
B)  EWJ. 
C)  QQQQ. 
D)  IWM. 
E)  VTI. 
A)  SPY. 
B)  EWJ. 
C)  QQQQ. 
D)  IWM. 
E)  VTI.

Question 13

Compared to mutual funds, hedge funds may require investors to _______________.

Accepted Answer

A)  Cover transaction costs 
B)  Lock-up their investment for an extended period of time 
C)  Invest in a mixture of equities, debt, and international securities 
D)  Use specific trading protocols 
A)  Cover transaction costs 
B)  Lock-up their investment for an extended period of time 
C)  Invest in a mixture of equities, debt, and international securities 
D)  Use specific trading protocols

Question 14

Growth Fund had year-end assets of $862,000,000 and liabilities of $12,000,000. There were 32,675,254 shares in the fund at year end. What was Growth Fund's net asset value?

Accepted Answer

A)  $28.17 
B)  $25.24 
C)  $19.62 
D)  $26.01 
E)  $21.56 
A)  $28.17 
B)  $25.24 
C)  $19.62 
D)  $26.01 
E)  $21.56

Question 15

Which of the following characteristics apply to unit investment trusts? I) Most are invested in fixed-income portfolios.II) They are actively-managed portfolios.III) The sponsor pools securities, then sells public shares in the trust.IV) The portfolio is fixed for the life of the fund.

Accepted Answer

A)  I and IV 
B)  I and II 
C)  I, III, and IV 
D)  I, II, and III 
E)  I, II, III, and IV 
A)  I and IV 
B)  I and II 
C)  I, III, and IV 
D)  I, II, and III 
E)  I, II, III, and IV

Question 16

A mutual fund had NAV per share of $36.15 on January 1, 2018. On December 31 of the same year, the fund's rate of return for the year was 14.0%. Income distributions were $1.16, and the fund had capital gain distributions of $2.12. Without considering taxes and transactions costs, what ending NAV would you calculate?

Accepted Answer

A)  $37.93 
B)  $34.52 
C)  $44.69 
D)  $47.25 
E)  $36.28 
A)  $37.93 
B)  $34.52 
C)  $44.69 
D)  $47.25 
E)  $36.28

Question 17

Which of the following statements about real estate investment trusts is true?

Accepted Answer

A)  REITs invest in real estate or loans secured by real estate. 
B)  REITs raise capital by borrowing from banks and issuing mortgages. 
C)  REITs are similar to open-end funds, with shares redeemable at NAV. 
D)  REITs invest in real estate or loans secured by real estate and raise capital by borrowing from banks and issuing mortgages. 
E)  All of the options are true. 
A)  REITs invest in real estate or loans secured by real estate. 
B)  REITs raise capital by borrowing from banks and issuing mortgages. 
C)  REITs are similar to open-end funds, with shares redeemable at NAV. 
D)  REITs invest in real estate or loans secured by real estate and raise capital by borrowing from banks and issuing mortgages. 
E)  All of the options are true.

Question 18

Investors' Choice Fund had NAV per share of $37.25 on January 1, 2018. On December 31 of the same year, the fund s rate of return for the year was 17.3%. Income distributions were $1.14, and the fund had capital gain distributions of $1.35. Without considering taxes and transactions costs, what ending NAV would you calculate for Investors' Choice?

Accepted Answer

A)  $41.20 
B)  $33.88 
C)  $43.69 
D)  $42.03 
E)  $46.62 
A)  $41.20 
B)  $33.88 
C)  $43.69 
D)  $42.03 
E)  $46.62

Question 19

A mutual fund had NAV per share of $37.12 on January 1, 2018. On December 31 of the same year, the fund's rate of return for the year was 11.0%. Income distributions were $2.26, and the fund had capital gain distributions of $1.64. Without considering taxes and transactions costs, what ending NAV would you calculate?

Accepted Answer

A)  $37.93 
B)  $34.52 
C)  $37.30 
D)  $47.25 
E)  $36.28 
A)  $37.93 
B)  $34.52 
C)  $37.30 
D)  $47.25 
E)  $36.28

Question 20

A mutual fund had year-end assets of $327,000,000 and liabilities of $46,000,000. If the fund NAV was $30.48, how many shares must have been held in the fund?

Accepted Answer

A)  11,354,751 
B)  8,412,642 
C)  10,165,476 
D)  9,165,414 
E)  9,219,160 
A)  11,354,751 
B)  8,412,642 
C)  10,165,476 
D)  9,165,414 
E)  9,219,160

Exam 4: Mutual Funds and Other Investment Companies

In 2018, the proportion of mutual funds (based on total assets) specializing in money market securities was

Investors in closed-end funds who wish to liquidate their positions must

A mutual fund had year-end assets of $750,000,000 and liabilities of $7,500,000. There were 40,000,000 shares in the fund at year end. What was the mutual fund's net asset value?

A mutual fund had average daily assets of $4.7 billion in 2018. The fund sold $2.2 billion worth of stock and purchased $3.6 billion worth of stock during the year. The fund's turnover ratio is

A mutual fund had year-end assets of $465,000,000 and liabilities of $37,000,000. If the fund NAV was $56.12, how many shares must have been held in the fund?

A mutual fund had year-end assets of $700,000,000 and liabilities of $7,000,000. There were 40,150,000 shares in the fund at year end. What was the mutual fund's net asset value?

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the Nasdaq 100 should choose

Which of the following is not an advantage of owning mutual funds?

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the MSCI Japan Index should choose

Compared to mutual funds, hedge funds may require investors to _______________.

Growth Fund had year-end assets of $862,000,000 and liabilities of $12,000,000. There were 32,675,254 shares in the fund at year end. What was Growth Fund's net asset value?

Which of the following characteristics apply to unit investment trusts? I) Most are invested in fixed-income portfolios.II) They are actively-managed portfolios.III) The sponsor pools securities, then sells public shares in the trust.IV) The portfolio is fixed for the life of the fund.

Which of the following statements about real estate investment trusts is true?

A mutual fund had year-end assets of $327,000,000 and liabilities of $46,000,000. If the fund NAV was $30.48, how many shares must have been held in the fund?

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Efficient Diversification

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

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