Question 1

Which of the following bond funds will rely on market timing?

Accepted Answer

A)  Asset allocation funds 
B)  Extended balanced funds 
C)  Convertible funds 
D)  Income funds 
E)  All of the above 
A)  Asset allocation funds 
B)  Extended balanced funds 
C)  Convertible funds 
D)  Income funds 
E)  All of the above E

Question 2

Money market deposit accounts:

Accepted Answer

A)  are protected by CDID. 
B)  are exempted from OSC regulations. 
C)  are covered under CIPF protection. 
D)  can suffer the loss of principal. 
E)  have unlimited cheque-writing privileges. 
A)  are protected by CDID. 
B)  are exempted from OSC regulations. 
C)  are covered under CIPF protection. 
D)  can suffer the loss of principal. 
E)  have unlimited cheque-writing privileges. A

Question 3

A mutual fund has a NAV of $34.28 and an offering price of $36.08. What is the front-end load of the fund?

Accepted Answer

A)  4.0% 
B)  4.5% 
C)  5.0% 
D)  5.5% 
E)  6.0% 
A)  4.0% 
B)  4.5% 
C)  5.0% 
D)  5.5% 
E)  6.0% C

Question 4

Which of the following facts concerning open-end mutual funds is false?

Accepted Answer

A)  The number of shares is fixed. 
B)  Open-end funds are typically created by investment advisory firms. 
C)  Open-end funds stand ready to repurchase shares every trading day. 
D)  An open-end fund can never sell for a premium or a discount. 
E)  Open-end mutual funds are owned by shareholders. 
A)  The number of shares is fixed. 
B)  Open-end funds are typically created by investment advisory firms. 
C)  Open-end funds stand ready to repurchase shares every trading day. 
D)  An open-end fund can never sell for a premium or a discount. 
E)  Open-end mutual funds are owned by shareholders.

Question 5

Which of the following is an advantage of purchasing mutual funds?

Accepted Answer

A)  Spreading your investment over many securities may limit your chances for a large return. 
B)  There costs associated with mutual funds which are not accrues with individual securities. 
C)  A mutual fund allows for diversification without having to purchase numerous securities. 
D)  Professional money managers are better able to make security decisions than are individual investors. 
E)  The losses incurred from mutual funds are covered by the CIPF. 
A)  Spreading your investment over many securities may limit your chances for a large return. 
B)  There costs associated with mutual funds which are not accrues with individual securities. 
C)  A mutual fund allows for diversification without having to purchase numerous securities. 
D)  Professional money managers are better able to make security decisions than are individual investors. 
E)  The losses incurred from mutual funds are covered by the CIPF.

Question 6

Which of the following is false regarding mutual funds?

Accepted Answer

A)  A mutual fund can deviate from its stated investment objective. 
B)  Mutual funds are generally managed without concern for the tax consequence to its shareholders. 
C)  It is common for mutual funds to underperform the stock market. 
D)  Mutual funds have experienced a decline in assets over the past twenty years. 
E)  Mutual fund investing has increased in part due to the growth of defined contribution plans. 
A)  A mutual fund can deviate from its stated investment objective. 
B)  Mutual funds are generally managed without concern for the tax consequence to its shareholders. 
C)  It is common for mutual funds to underperform the stock market. 
D)  Mutual funds have experienced a decline in assets over the past twenty years. 
E)  Mutual fund investing has increased in part due to the growth of defined contribution plans.

Question 7

A mutual fund has average daily assets of $150 million during the year. The fund had sales of $32 million and purchases of $43 million. What is the fund turnover?

Accepted Answer

A)  0.29 
B)  0.26 
C)  0.17 
D)  0.21 
E)  0.32 
A)  0.29 
B)  0.26 
C)  0.17 
D)  0.21 
E)  0.32

Question 8

All of the following expenses are reported in a mutual fund's prospectus except:

Accepted Answer

A)  front-end loads. 
B)  special fees. 
C)  management fees. 
D)  back-end loads. 
E)  trading costs. 
A)  front-end loads. 
B)  special fees. 
C)  management fees. 
D)  back-end loads. 
E)  trading costs.

Question 9

The _____________ is the difference between the load and the NAV.

Accepted Answer

A)  offering price 
B)  deferred sales charge 
C)  sales charge 
D)  management fee 
E)  exchange fee 
A)  offering price 
B)  deferred sales charge 
C)  sales charge 
D)  management fee 
E)  exchange fee

Question 10

A tax-managed stock fund:

Accepted Answer

A)  Produces income that is tax-free 
B)  Tends to lower turnover 
C)  Concentrates on maximizing pre-tax income 
D)  Invests only in tax-free securities 
E)  Only sells securities if they will produce a loss 
A)  Produces income that is tax-free 
B)  Tends to lower turnover 
C)  Concentrates on maximizing pre-tax income 
D)  Invests only in tax-free securities 
E)  Only sells securities if they will produce a loss

Question 11

Which of the following is true regarding hedge funds?

Accepted Answer

A)  They are more liquid than mutual fund shares 
B)  They are generally less restricted in how and where they can invest 
C)  They have no limitations on when and how often investment capital can be distributed or removed 
D)  All of the above 
E)  None of the above 
A)  They are more liquid than mutual fund shares 
B)  They are generally less restricted in how and where they can invest 
C)  They have no limitations on when and how often investment capital can be distributed or removed 
D)  All of the above 
E)  None of the above

Question 12

A mutual fund has 10,000 shares of Stock D at a price of $34 and 15,000 shares of Stock E at a price of $41. The fund has liabilities of $87,000 and a NAV of $41.05. How many shares of the fund are outstanding?

Accepted Answer

A)  20,612 
B)  23,246 
C)  24,324 
D)  21,145 
E)  18,306 
A)  20,612 
B)  23,246 
C)  24,324 
D)  21,145 
E)  18,306

Question 13

Hedge funds are:

Accepted Answer

A)  high-risk investments. 
B)  suitable only for the super-wealthy. 
C)  involved with active portfolio management. 
D)  constructed with a special fee scheme. 
E)  all of the above. 
A)  high-risk investments. 
B)  suitable only for the super-wealthy. 
C)  involved with active portfolio management. 
D)  constructed with a special fee scheme. 
E)  all of the above.

Question 14

In order to be treated as a "flow-through entity" for tax purposes, a mutual fund must do which of the following?
I. It must hold almost all of its assets in stocks, bonds, and other securities.
II. It must follow investing rules set by the Canada Revenue Agency.
III. It must pass through all realized investment income to its shareholders.

Accepted Answer

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

Question 15

PING Fund is a new closed-end that just offered its shares to the public. The fund raised $40 million. Each share sold for $60. The fee for the fund promoter was 2.5% of the initial proceeds. What was the value of your initial $20,000 purchase before the shares began trading in the market?

Accepted Answer

A)  $18,400 
B)  $19,500 
C)  $20,000 
D)  $20,500 
E)  $21,600 
A)  $18,400 
B)  $19,500 
C)  $20,000 
D)  $20,500 
E)  $21,600

Question 16

Why did income trusts become less popular with investors in Canada after October 31, 2006?

Accepted Answer

A)  A new income trust tax was announced which increased taxes on income trusts. 
B)  New measures in GAAP made it harder to defer profits. 
C)  Income trusts lost their status to be bought as RRSP investments. 
D)  Ownership laws changed requiring a minimum 50% Canadian ownership of income trusts. 
E)  The creation of income trusts were banned. 
A)  A new income trust tax was announced which increased taxes on income trusts. 
B)  New measures in GAAP made it harder to defer profits. 
C)  Income trusts lost their status to be bought as RRSP investments. 
D)  Ownership laws changed requiring a minimum 50% Canadian ownership of income trusts. 
E)  The creation of income trusts were banned.

Question 17

Expenses charged by mutual funds to cover such as account set-up and annual registration costs are known as:

Accepted Answer

A)  exchange fees. 
B)  special fees. 
C)  turnover. 
D)  deferred sales charge. 
E)  trading costs. 
A)  exchange fees. 
B)  special fees. 
C)  turnover. 
D)  deferred sales charge. 
E)  trading costs.

Question 18

Which of the following is false regarding RRSPs?

Accepted Answer

A)  Any unused RRSP deduction limit can be carried forward indefinitely. 
B)  Mutual fund losses within RRSPs can be claimed on tax returns. 
C)  All contributions to RRSPs are tax deductible. 
D)  There is a deadline for investors to make their RRSP-eligible contributions. 
E)  None of the above. 
A)  Any unused RRSP deduction limit can be carried forward indefinitely. 
B)  Mutual fund losses within RRSPs can be claimed on tax returns. 
C)  All contributions to RRSPs are tax deductible. 
D)  There is a deadline for investors to make their RRSP-eligible contributions. 
E)  None of the above.

Question 19

You purchase a closed-end fund at its initial public offering. The initial offering price is $30 per share. The fund promoter receives a 7 percent fee from the offering, and the fund sells at a 9 percent discount to NAV the day after the offering. What is the value of your investment per share?

Accepted Answer

A)  $25.39 
B)  $27.90 
C)  $26.95 
D)  $27.30 
E)  $26.34 
A)  $25.39 
B)  $27.90 
C)  $26.95 
D)  $27.30 
E)  $26.34

Question 20

A(n) ___________ fund invests in stocks around the world, but can also have significant holdings in domestic companies in Canada.

Accepted Answer

A)  International 
B)  emerging market 
C)  ETF 
D)  global 
E)  closed-end 
A)  International 
B)  emerging market 
C)  ETF 
D)  global 
E)  closed-end

Which of the following bond funds will rely on market timing?

Money market deposit accounts:

A mutual fund has a NAV of $34.28 and an offering price of $36.08. What is the front-end load of the fund?

Which of the following facts concerning open-end mutual funds is false?

Which of the following is an advantage of purchasing mutual funds?

Which of the following is false regarding mutual funds?

A mutual fund has average daily assets of $150 million during the year. The fund had sales of $32 million and purchases of $43 million. What is the fund turnover?

All of the following expenses are reported in a mutual fund's prospectus except:

The _____________ is the difference between the load and the NAV.

A tax-managed stock fund:

Which of the following is true regarding hedge funds?

A mutual fund has 10,000 shares of Stock D at a price of $34 and 15,000 shares of Stock E at a price of $41. The fund has liabilities of $87,000 and a NAV of $41.05. How many shares of the fund are outstanding?

Hedge funds are:

PING Fund is a new closed-end that just offered its shares to the public. The fund raised $40 million. Each share sold for $60. The fee for the fund promoter was 2.5% of the initial proceeds. What was the value of your initial $20,000 purchase before the shares began trading in the market?

Why did income trusts become less popular with investors in Canada after October 31, 2006?

Expenses charged by mutual funds to cover such as account set-up and annual registration costs are known as:

Which of the following is false regarding RRSPs?

You purchase a closed-end fund at its initial public offering. The initial offering price is $30 per share. The fund promoter receives a 7 percent fee from the offering, and the fund sells at a 9 percent discount to NAV the day after the offering. What is the value of your investment per share?

A(n) ___________ fund invests in stocks around the world, but can also have significant holdings in domestic companies in Canada.

A Brief History of Risk and Return

Diversification and Risky Asset Allocation

The Investment Process

Overview of Security Types

The Stock Market

Common Stock Valuation

Stock Price Behaviour and Market Efficiency

Behavioural Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Return, Risk and Security Management

Performance Evaluation and Risk Management

Options

Option Valuation

Futures Contracts

Projecting Cash Flow and Earnings

Corporate Bonds

Government Bonds and Mortgaged-Backed Securities

International Portfolio Investment

Filters

Exam 5: Mutual Funds

Which of the following bond funds will rely on market timing?

Money market deposit accounts:

A mutual fund has a NAV of $34.28 and an offering price of $36.08. What is the front-end load of the fund?

Which of the following facts concerning open-end mutual funds is false?

Which of the following is an advantage of purchasing mutual funds?

Which of the following is false regarding mutual funds?

A mutual fund has average daily assets of $150 million during the year. The fund had sales of $32 million and purchases of $43 million. What is the fund turnover?

All of the following expenses are reported in a mutual fund's prospectus except:

The _____________ is the difference between the load and the NAV.

A tax-managed stock fund:

Which of the following is true regarding hedge funds?

A mutual fund has 10,000 shares of Stock D at a price of $34 and 15,000 shares of Stock E at a price of $41. The fund has liabilities of $87,000 and a NAV of $41.05. How many shares of the fund are outstanding?

Hedge funds are:

PING Fund is a new closed-end that just offered its shares to the public. The fund raised $40 million. Each share sold for $60. The fee for the fund promoter was 2.5% of the initial proceeds. What was the value of your initial $20,000 purchase before the shares began trading in the market?

Why did income trusts become less popular with investors in Canada after October 31, 2006?

Expenses charged by mutual funds to cover such as account set-up and annual registration costs are known as:

Which of the following is false regarding RRSPs?

You purchase a closed-end fund at its initial public offering. The initial offering price is $30 per share. The fund promoter receives a 7 percent fee from the offering, and the fund sells at a 9 percent discount to NAV the day after the offering. What is the value of your investment per share?

A(n) ___________ fund invests in stocks around the world, but can also have significant holdings in domestic companies in Canada.

A Brief History of Risk and Return

Diversification and Risky Asset Allocation

The Investment Process

Overview of Security Types

The Stock Market

Common Stock Valuation

Stock Price Behaviour and Market Efficiency

Behavioural Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Return, Risk and Security Management

Performance Evaluation and Risk Management

Options

Option Valuation

Futures Contracts

Projecting Cash Flow and Earnings

Corporate Bonds

Government Bonds and Mortgaged-Backed Securities

International Portfolio Investment

Filters