Question 1

Management fees and other expenses of mutual funds may include

Accepted Answer

A)  front-end loads. 
B)  back-end loads. 
C)  other charges. 
D)  a and b only. 
E)  a,b and c. 
A)  front-end loads. 
B)  back-end loads. 
C)  other charges. 
D)  a and b only. 
E)  a,b and c.

Question 2

Diversified U.S.stock funds have an average turnover rate of close to

Accepted Answer

A)  5% 
B)  20% 
C)  50% 
D)  90% 
E)  more than 100% 
A)  5% 
B)  20% 
C)  50% 
D)  90% 
E)  more than 100%

Question 3

Which of the following is not an advantage of 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)  A,B and C are all advantages of mutual funds. 
E)  Neither A nor B nor C are advantages 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)  A,B and C are all advantages of mutual funds. 
E)  Neither A nor B nor C are advantages of mutual funds.

Question 4

Discuss the taxation of mutual fund income.

Accepted Answer

Investment returns of mutual funds are g

Question 5

The risk profile of hedge funds _____,making performance evaluation _____.

Accepted Answer

A)  can shift rapidly and substantially;challenging 
B)  can shift rapidly and substantially;straightforward 
C)  is stable;challenging 
D)  is stable;straightforward 
E)  none of these 
A)  can shift rapidly and substantially;challenging 
B)  can shift rapidly and substantially;straightforward 
C)  is stable;challenging 
D)  is stable;straightforward 
E)  none of these

Question 6

Most actively managed mutual funds,when compared to a market index such as the Wilshire 5000,

Accepted Answer

A)  beat the market return in all years. 
B)  beat the market return in most years. 
C)  exceed the return on index funds. 
D)  do not outperform the market 
E)  None of these is a correct statement. 
A)  beat the market return in all years. 
B)  beat the market return in most years. 
C)  exceed the return on index funds. 
D)  do not outperform the market 
E)  None of these is a correct statement.

Question 7

The fee that U.S.mutual funds use to help pay for advertising and promotional literature is called a

Accepted Answer

A)  front-end load fee 
B)  back-end load fee 
C)  operating expense fee 
D)  12b-1 fee 
E)  structured fee 
A)  front-end load fee 
B)  back-end load fee 
C)  operating expense fee 
D)  12b-1 fee 
E)  structured fee

Question 8

Which of the following statements about real estate limited partnerships (RELP)is false?

Accepted Answer

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

Question 9

A hedge fund pursuing a ______ strategy is betting one sector of the economy will outperform other sectors.

Accepted Answer

A)  directional 
B)  non-directional 
C)  stock or bond 
D)  arbitrage or speculation 
E)  none of these 
A)  directional 
B)  non-directional 
C)  stock or bond 
D)  arbitrage or speculation 
E)  none of these

Question 10

Hedge funds traditionally have ______ than 100 investors and ______ to the general public.

Accepted Answer

A)  more;advertise 
B)  more;do not advertise 
C)  less;advertise 
D)  less;do not advertise 
E)  none of these 
A)  more;advertise 
B)  more;do not advertise 
C)  less;advertise 
D)  less;do not advertise 
E)  none of these

Question 11

Discuss the relationships between investor objectives,constraints,and policies.

Accepted Answer

Investor objectives reflect the investor

Question 12

A hedge fund pursuing a ______ strategy is attempting to exploit temporary misalignments in relative pricing.

Accepted Answer

A)  directional 
B)  non-directional 
C)  stock or bond 
D)  arbitrage or speculation 
E)  none of these 
A)  directional 
B)  non-directional 
C)  stock or bond 
D)  arbitrage or speculation 
E)  none of these

Question 13

Pinnacle Fund had year-end assets of $825,000,000 and liabilities of $25,000,000.If Pinnacle's NAV was $32.18,how many shares must have been held in the fund?

Accepted Answer

A)  21,619,346.92 
B)  22,930,546.28 
C)  24,860,161.59 
D)  25,693,645.25 
E)  26,124,567.73 
A)  21,619,346.92 
B)  22,930,546.28 
C)  24,860,161.59 
D)  25,693,645.25 
E)  26,124,567.73

Question 14

Which one of the following statements regarding open-end mutual funds is false?

Accepted Answer

A)  The funds redeem shares at net asset value. 
B)  The funds offer investors professional management. 
C)  The funds offer investors a guaranteed rate of return. 
D)  b and c. 
E)  a and b. 
A)  The funds redeem shares at net asset value. 
B)  The funds offer investors professional management. 
C)  The funds offer investors a guaranteed rate of return. 
D)  b and c. 
E)  a and b.

Question 15

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.

Question 16

Patty O'Furniture purchased 100 shares of Green Isle mutual fund at a net asset value of $42 per share.During the year Patty received dividend income distributions of $2.00 per share and capital gains distributions of $4.30 per share.At the end of the year the shares had a net asset value of $40 per share.What was Patty's rate of return on this investment?

Accepted Answer

A)  5.43% 
B)  10.24% 
C)  7.19% 
D)  12.44% 
E)  9.18% 
A)  5.43% 
B)  10.24% 
C)  7.19% 
D)  12.44% 
E)  9.18%

Question 17

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 18

If the yield on mortgage-backed securities was abnormally low compared to Treasury bonds,a hedge fund pursuing a relative value strategy would ______.

Accepted Answer

A)  short sell the Treasury and short sell the mortgage-backed securities 
B)  short sell the Treasury and buy the mortgage-backed securities 
C)  buy the Treasury and buy the mortgage-backed securities 
D)  buy the Treasury and short sell the mortgage-backed securities 
E)  C only since short sales are prohibited 
A)  short sell the Treasury and short sell the mortgage-backed securities 
B)  short sell the Treasury and buy the mortgage-backed securities 
C)  buy the Treasury and buy the mortgage-backed securities 
D)  buy the Treasury and short sell the mortgage-backed securities 
E)  C only since short sales are prohibited

Question 19

An example of a ______ strategy is the mispricing of a futures contract that must be corrected by contract expiration.

Accepted Answer

A)  market neutral 
B)  directional 
C)  relative value 
D)  divergence 
E)  convergence 
A)  market neutral 
B)  directional 
C)  relative value 
D)  divergence 
E)  convergence

Question 20

Commingled funds are

Accepted Answer

A)  amounts invested in equity and fixed-income mutual funds. 
B)  funds that may be purchased at intervals of 3,6,or 12 month intervals at the discretion of management. 
C)  amounts invested in domestic and global equities. 
D)  closed-end funds that may be repurchased only once every two years at the discretion of mutual fund management. 
E)  partnerships of investors that pool their funds,which are then managed for a fee. 
A)  amounts invested in equity and fixed-income mutual funds. 
B)  funds that may be purchased at intervals of 3,6,or 12 month intervals at the discretion of management. 
C)  amounts invested in domestic and global equities. 
D)  closed-end funds that may be repurchased only once every two years at the discretion of mutual fund management. 
E)  partnerships of investors that pool their funds,which are then managed for a fee.

Exam 22: Mutual Fund: Objectives, Types, NAV, Turnover Ratio, and More

Management fees and other expenses of mutual funds may include

Diversified U.S.stock funds have an average turnover rate of close to

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

Discuss the taxation of mutual fund income.

The risk profile of hedge funds _____,making performance evaluation _____.

Most actively managed mutual funds,when compared to a market index such as the Wilshire 5000,

The fee that U.S.mutual funds use to help pay for advertising and promotional literature is called a

Which of the following statements about real estate limited partnerships (RELP)is false?

A hedge fund pursuing a ______ strategy is betting one sector of the economy will outperform other sectors.

Hedge funds traditionally have ______ than 100 investors and ______ to the general public.

Discuss the relationships between investor objectives,constraints,and policies.

A hedge fund pursuing a ______ strategy is attempting to exploit temporary misalignments in relative pricing.

Pinnacle Fund had year-end assets of $825,000,000 and liabilities of $25,000,000.If Pinnacle's NAV was $32.18,how many shares must have been held in the fund?

Which one of the following statements regarding open-end mutual funds is false?

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

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?

If the yield on mortgage-backed securities was abnormally low compared to Treasury bonds,a hedge fund pursuing a relative value strategy would ______.

An example of a ______ strategy is the mispricing of a futures contract that must be corrected by contract expiration.

Commingled funds are

Investments: Background and Issues

Asset Classes and Financial Instruments

Securities Markets

Mutual Funds and Other Investment Companies

Risk and Return: Past and Prologue

Efficient Diversification

Capital Asset Pricing and Arbitrage Pricing Theory

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Bond Prices and Yield

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation

Financial Statement Analysis

Options Markets

Option Valuation

Futures Markets and Risk Management

Performance Evaluation and Active Portfolio Management

Globalization and International Investing

Taxes, Inflation, and Investment Strategy

Investors and the Investment Process

International Finance and Investments: Understanding Foreign Markets and Risks

Filters

The risk profile of hedge funds _,making performance evaluation _.

Hedge funds traditionally have than 100 investors and to the general public.