Question 1

Realized returns by mutual funds​

Accepted Answer

A)  ​tend to outperform the market 
B)  are usually retained to finance growth​ 
C)  exceed realized losses​ 
D)  are generally distributed​ 
A)  ​tend to outperform the market 
B)  are usually retained to finance growth​ 
C)  exceed realized losses​ 
D)  are generally distributed​ D

Question 2

If the shares of a closed-end investment company sell for a discount,​

Accepted Answer

A)  ​the shares are undervalued 
B)  the price of the stock is less than the company's liabilities​ 
C)  the net assets exceed the price of the shares​ 
D)  the value of the assets have declined more than the price of the stock​ 
A)  ​the shares are undervalued 
B)  the price of the stock is less than the company's liabilities​ 
C)  the net assets exceed the price of the shares​ 
D)  the value of the assets have declined more than the price of the stock​ C

Question 3

The portfolios of balanced funds​

Accepted Answer

A)  ​exclude American stocks 
B)  ​reduce systematic and purchasing power risks 
C)  ​are well diversified 
D)  generate the highest returns​ 
A)  ​exclude American stocks 
B)  ​reduce systematic and purchasing power risks 
C)  ​are well diversified 
D)  generate the highest returns​ C

Question 4

No load mutual funds​

Accepted Answer

A)  ​have no selling fees 
B)  pay no cash dividends​ 
C)  have no administrative expenses​ 
D)  have a fixed portfolio​ 
A)  ​have no selling fees 
B)  pay no cash dividends​ 
C)  have no administrative expenses​ 
D)  have a fixed portfolio​

Question 5

When an individual wants to remove funds from a closed end investment company, that investor sells the shares back to the company.​

Accepted Answer

A) True 
 B)False

Question 6

A mutual fund has a fixed number of shares.​

Accepted Answer

A) True 
 B)False

Question 7

If an investor buys shares in a closed-end investment company for $46 and the net asset value is $53, what is the discount? If the company distributes $1, the net asset value rises to $58, and the investor sells the shares for a premium of 5 percent over the net asset value, what is the percentage earned on the investment?

Accepted Answer

The discount is $53 - 46 = $7

Question 8

The shares of mutual funds cannot sell for a discount from their net asset value.​

Accepted Answer

A) True 
 B)False

Question 9

Costs associated with investing in mutual funds include​
1) management fees
2) taxes on unrealized profits
3) brokerage commissions when the investor sells the shares
4) load charges

Accepted Answer

A) ​1 and 3 
B) 1 and 4​ 
C) 2 and 3​ 
D) 2 and 4​ 
A) ​1 and 3 
B) 1 and 4​ 
C) 2 and 3​ 
D) 2 and 4​

Question 10

Mutual funds​

Accepted Answer

A)  ​pay federal income taxes 
B)  distribute earnings to receive favorable tax treatment​ 
C)  ​pay only state and local taxes 
D)  pay taxes only on capital gains​ 
A)  ​pay federal income taxes 
B)  distribute earnings to receive favorable tax treatment​ 
C)  ​pay only state and local taxes 
D)  pay taxes only on capital gains​

Question 11

An index fund seeks to duplicate an index of the market such as the S&P 500 stock index.

Accepted Answer

A) True 
 B)False

Question 12

The net asset value​

Accepted Answer

A)  ​is the price of an investment company's shares 
B)  is reduced by the loading fee​ 
C)  declines if the value of the fund's assets are reduced​ 
D)  measures the quality of the fund's management​ 
A)  ​is the price of an investment company's shares 
B)  is reduced by the loading fee​ 
C)  declines if the value of the fund's assets are reduced​ 
D)  measures the quality of the fund's management​

Question 13

​The net asset value of a mutual fund's share increases with

Accepted Answer

A)  ​an increase in loading fees 
B)  an increase in interest rates​ 
C)  an increase in security prices​ 
D)  an increase in the fund's assets​ 
A)  ​an increase in loading fees 
B)  an increase in interest rates​ 
C)  an increase in security prices​ 
D)  an increase in the fund's assets​

Question 14

The shares of mutual funds tend to sell for a discount from their net asset value. om their net asset value.​

Accepted Answer

A) True 
 B)False

Question 15

The efficient market hypothesis suggests that​
1) professional portfolio managers will outperform the individual investor
2) professional portfolio managers will not outperform the individual investor
3) professional portfolio managers will consistently outperform the market
4) professional portfolio managers will not consistently outperform the market

Accepted Answer

A) ​1 and 3 
B) 1 and 4​ 
C) 2 and 3​ 
D) 2 and 4​ 
A) ​1 and 3 
B) 1 and 4​ 
C) 2 and 3​ 
D) 2 and 4​

Question 16

The loading fee reduces a fund's net asset value.​

Accepted Answer

A) True 
 B)False

Question 17

The shares of closed-end investment companies generally sell for a premium and rarely sell for a discount from their net asset value.​

Accepted Answer

A) True 
 B)False

Question 18

The shares of closed‑end investment companies sell for their net asset value.​

Accepted Answer

A) True 
 B)False

Question 19

The shares of closed-end investment companies are bought and sold in secondary markets like the NYSE.​

Accepted Answer

A) True 
 B)False

Question 20

The shares of a no load fund​

Accepted Answer

A)  ​sell for a discount from the fund's net asset value 
B)  are purchased through the secondary markets​ 
C)  sell for the fund's net asset value​ 
D)  sell for a premium over the fund's net asset value​ 
A)  ​sell for a discount from the fund's net asset value 
B)  are purchased through the secondary markets​ 
C)  sell for the fund's net asset value​ 
D)  sell for a premium over the fund's net asset value​

Exam 17: Investment Companies

Realized returns by mutual funds​

If the shares of a closed-end investment company sell for a discount,​

The portfolios of balanced funds​

No load mutual funds​

When an individual wants to remove funds from a closed end investment company, that investor sells the shares back to the company.​

A mutual fund has a fixed number of shares.​

The shares of mutual funds cannot sell for a discount from their net asset value.​

Costs associated with investing in mutual funds include​ 1) management fees 2) taxes on unrealized profits 3) brokerage commissions when the investor sells the shares 4) load charges

Mutual funds​

An index fund seeks to duplicate an index of the market such as the S&P 500 stock index.

The net asset value​

​The net asset value of a mutual fund's share increases with

The shares of mutual funds tend to sell for a discount from their net asset value. om their net asset value.​

The loading fee reduces a fund's net asset value.​

The shares of closed-end investment companies generally sell for a premium and rarely sell for a discount from their net asset value.​

The shares of closed‑end investment companies sell for their net asset value.​

The shares of closed-end investment companies are bought and sold in secondary markets like the NYSE.​

The shares of a no load fund​

The Role of Financial Markets and Financial Intermediaries

Investment Banking

Securities Markets

The Federal Reserve

International Currency Flows

The Time Value of Money

Risk and Its Measurement

Analysis of Financial Statements

The Features of Stock

Stock Valuation

The Features of Long-Term Debt - Bonds

Bond Pricing and Yields

Preferred Stock

Convertile Securities

Investment Returns

Forms of Businss and Corporate Taxation

Break-Even Analysis and the Payback Period

Leverage

Cost of Capital

Capital Budgeting

Forecasting

Cash Budgeting

Management of Current Assets

Management of Short-Term Liabilities

Intermediate-Term Debt and Leasing

Options: Puts and Calls

Futures and Swaps

Filters

Realized returns by mutual funds

If the shares of a closed-end investment company sell for a discount,

The portfolios of balanced funds

No load mutual funds

When an individual wants to remove funds from a closed end investment company, that investor sells the shares back to the company.

A mutual fund has a fixed number of shares.

The shares of mutual funds cannot sell for a discount from their net asset value.

Costs associated with investing in mutual funds include 1) management fees 2) taxes on unrealized profits 3) brokerage commissions when the investor sells the shares 4) load charges

Mutual funds

The net asset value

The net asset value of a mutual fund's share increases with

The shares of mutual funds tend to sell for a discount from their net asset value. om their net asset value.

The loading fee reduces a fund's net asset value.

The shares of closed-end investment companies generally sell for a premium and rarely sell for a discount from their net asset value.

The shares of closed‑end investment companies sell for their net asset value.

The shares of closed-end investment companies are bought and sold in secondary markets like the NYSE.

The shares of a no load fund