Question 1

An investment company:

Accepted Answer

A)  manages financial and real assets for itself. 
B)  operates as a financial company on Wall Street. 
C)  manages financial assets for investors. 
D)  operates as an arm of a full service brokerage. 
E)  manages real assets for investors. 
A)  manages financial and real assets for itself. 
B)  operates as a financial company on Wall Street. 
C)  manages financial assets for investors. 
D)  operates as an arm of a full service brokerage. 
E)  manages real assets for investors.

Question 2

A mutual fund has total net assets of $3.2 million and 150,000 shares. What as the NAV of the fund?

Accepted Answer

A)  $21.20 
B)  $21.33 
C)  $21.67 
D)  $21.89 
E)  $21.97 
A)  $21.20 
B)  $21.33 
C)  $21.67 
D)  $21.89 
E)  $21.97

Question 3

A mutual fund with a NAV of $99.99 has a front-end load of 3 percent. What is the offering price of the fund?

Accepted Answer

A)  $105.65 
B)  $96.99 
C)  $103.08 
D)  $97.01 
E)  $89.45 
A)  $105.65 
B)  $96.99 
C)  $103.08 
D)  $97.01 
E)  $89.45

Question 4

Which of the following types of mutual funds will likely have the most stable net asset value?

Accepted Answer

A)  Long-term growth funds. 
B)  Money market funds. 
C)  Government bond funds. 
D)  Growth and income funds. 
E)  International stock funds. 
A)  Long-term growth funds. 
B)  Money market funds. 
C)  Government bond funds. 
D)  Growth and income funds. 
E)  International stock funds.

Question 5

A taxable money market mutual fund has a return of 3.8 percent. If you are in a 34 percent tax bracket, what interest rate would you require on a non-taxable income trust to be equally well-off?

Accepted Answer

A)  5.75% or higher 
B)  2.51% or higher 
C)  3.80% or higher 
D)  2.51% or lower 
E)  5.75% or lower 
A)  5.75% or higher 
B)  2.51% or higher 
C)  3.80% or higher 
D)  2.51% or lower 
E)  5.75% or lower

Question 6

The main difference between a closed-end fund and an open-end fund is:

Accepted Answer

A)  The minimum initial investment 
B)  The way in which each is regulated by the OSC 
C)  The way each is traded after the initial public offering 
D)  The type of allowable investments 
E)  All of the above 
A)  The minimum initial investment 
B)  The way in which each is regulated by the OSC 
C)  The way each is traded after the initial public offering 
D)  The type of allowable investments 
E)  All of the above

Question 7

To analyze a mutual fund, we pay the least attention to its

Accepted Answer

A)  degree of diversification. 
B)  market timing. 
C)  management expense ratio. 
D)  trading volume. 
E)  risk level. 
A)  degree of diversification. 
B)  market timing. 
C)  management expense ratio. 
D)  trading volume. 
E)  risk level.

Question 8

What is a soft-dollar transaction?

Accepted Answer

It occurs when a service seller uses gai

Question 9

Which of the following funds would likely maintain a relatively constant investment percentage in stocks and bonds?

Accepted Answer

A)  Aggressive growth fund. 
B)  Balanced fund. 
C)  Growth and income fund. 
D)  Money market fund. 
E)  Equity income fund. 
A)  Aggressive growth fund. 
B)  Balanced fund. 
C)  Growth and income fund. 
D)  Money market fund. 
E)  Equity income fund.

Question 10

Which of the following mutual funds will be the best in providing current income, safety of principal and liquidity?

Accepted Answer

A)  Income funds. 
B)  Balanced funds. 
C)  Exchange-traded funds. 
D)  Money market funds. 
E)  All of the above. 
A)  Income funds. 
B)  Balanced funds. 
C)  Exchange-traded funds. 
D)  Money market funds. 
E)  All of the above.

Question 11

You purchase 500 shares of a mutual fund with a front-end load of 5 percent and a NAV of $63.12. The assets of the fund (including reinvested dividends) appreciated at 12 percent for the year, and the fund had total expenses of 1.80 percent. What was your return for the year?

Accepted Answer

A)  12.00% 
B)  4.70% 
C)  6.40% 
D)  10.20% 
E)  4.94% 
A)  12.00% 
B)  4.70% 
C)  6.40% 
D)  10.20% 
E)  4.94%

Question 12

A mutual fund has $840 million in assets and $40,000 in liabilities. There are 35 million shares outstanding. The fund charges a 5% front-end load. What is the offering price of the fund?

Accepted Answer

A)  $24.00 
B)  $23.91 
C)  $28.97 
D)  $19.18 
E)  $25.26 
A)  $24.00 
B)  $23.91 
C)  $28.97 
D)  $19.18 
E)  $25.26

Question 13

You invest $10,000 in a mutual fund at the beginning of the year at a NAV of $32.80. The fund makes a dividend distribution of $0.18 and a capital gains distribution of $0.38. If the NAV at the end of the year is $36.21, what was your return for the year?

Accepted Answer

A)  10.47% 
B)  11.55% 
C)  9.91% 
D)  10.96% 
E)  12.10% 
A)  10.47% 
B)  11.55% 
C)  9.91% 
D)  10.96% 
E)  12.10%

Question 14

A hedge fund is a(n) ___________ investment company that sells its shares to ___________.

Accepted Answer

A)  Registered; the general public 
B)  Registered; only to a limited number of financially sophisticated investors 
C)  Open-end; the general public 
D)  Unregistered; a limited number of private investors 
E)  Close-end; only a limited number of financial institutions 
A)  Registered; the general public 
B)  Registered; only to a limited number of financially sophisticated investors 
C)  Open-end; the general public 
D)  Unregistered; a limited number of private investors 
E)  Close-end; only a limited number of financial institutions

Question 15

Which of the following is inappropriate for investing in a mutual fund?

Accepted Answer

A)  Match the investment goal to a specific fund category 
B)  Identify the types of services offered by funds that may be useful 
C)  Develop a clear investment objective 
D)  Select the fund with the best performance over the most recent quarter 
E)  None of the above 
A)  Match the investment goal to a specific fund category 
B)  Identify the types of services offered by funds that may be useful 
C)  Develop a clear investment objective 
D)  Select the fund with the best performance over the most recent quarter 
E)  None of the above

Question 16

One year ago, you purchased 300 shares of a mutual fund that had a front-end load of 4%. The NPV at the time of purchase was $55.20. Today, the NAV (including all reinvested dividends) is $56.32 and the total expenses of the fund for the year were 1.65%. What was your return for the year?

Accepted Answer

A)  - 2.05% 
B)  - 1.55% 
C)  0.91% 
D)  1.96% 
E)  2.10% 
A)  - 2.05% 
B)  - 1.55% 
C)  0.91% 
D)  1.96% 
E)  2.10%

Question 17

List and explain the four basic fees or expenses associated with mutual fund investing. Which expense(s) are the most important for a short-term investor?
 Which expense(s) are the most important to a long-term investor?

Accepted Answer

Sales charges are the fees charged when

Question 18

A mutual fund has an offer price of $63.54 and a front-end load of 4.5 percent. If there are 8.5 millions shares outstanding, what are the total assets of the fund assuming the fund has no liabilities?

Accepted Answer

A)  $540,090,000 
B)  $565,505,000 
C)  $527,360,000 
D)  $515,780,000 
E)  $508,200,000 
A)  $540,090,000 
B)  $565,505,000 
C)  $527,360,000 
D)  $515,780,000 
E)  $508,200,000

Question 19

A mutual fund holds three stocks. The number of shares of each stock is 12,000, 18,000, and 25,000, at a price of $64, $56, and $32, respectively. If the fund has liabilities of $160,000 and 115,000 shares outstanding, what is the NAV per share?

Accepted Answer

A)  $22.40 
B)  $20.84 
C)  $23.16 
D)  $21.75 
E)  $21.01 
A)  $22.40 
B)  $20.84 
C)  $23.16 
D)  $21.75 
E)  $21.01

Question 20

Which of the following is a reason that makes the use of fund performance history problematic?

Accepted Answer

A)  Funds with high expense ratios tend to be poor performers. 
B)  The best performing funds may simply be the riskiest funds. 
C)  A fund tends to keep its performance ranking over time. 
D)  Mutual fund returns are difficult to measure. 
E)  All of the above are true. 
A)  Funds with high expense ratios tend to be poor performers. 
B)  The best performing funds may simply be the riskiest funds. 
C)  A fund tends to keep its performance ranking over time. 
D)  Mutual fund returns are difficult to measure. 
E)  All of the above are true.

An investment company:

A mutual fund has total net assets of $3.2 million and 150,000 shares. What as the NAV of the fund?

A mutual fund with a NAV of $99.99 has a front-end load of 3 percent. What is the offering price of the fund?

Which of the following types of mutual funds will likely have the most stable net asset value?

A taxable money market mutual fund has a return of 3.8 percent. If you are in a 34 percent tax bracket, what interest rate would you require on a non-taxable income trust to be equally well-off?

The main difference between a closed-end fund and an open-end fund is:

To analyze a mutual fund, we pay the least attention to its

What is a soft-dollar transaction?

Which of the following funds would likely maintain a relatively constant investment percentage in stocks and bonds?

Which of the following mutual funds will be the best in providing current income, safety of principal and liquidity?

You purchase 500 shares of a mutual fund with a front-end load of 5 percent and a NAV of $63.12. The assets of the fund (including reinvested dividends) appreciated at 12 percent for the year, and the fund had total expenses of 1.80 percent. What was your return for the year?

A mutual fund has $840 million in assets and $40,000 in liabilities. There are 35 million shares outstanding. The fund charges a 5% front-end load. What is the offering price of the fund?

You invest $10,000 in a mutual fund at the beginning of the year at a NAV of $32.80. The fund makes a dividend distribution of $0.18 and a capital gains distribution of $0.38. If the NAV at the end of the year is $36.21, what was your return for the year?

A hedge fund is a(n) _ investment company that sells its shares to _.

Which of the following is inappropriate for investing in a mutual fund?

One year ago, you purchased 300 shares of a mutual fund that had a front-end load of 4%. The NPV at the time of purchase was $55.20. Today, the NAV (including all reinvested dividends) is $56.32 and the total expenses of the fund for the year were 1.65%. What was your return for the year?

List and explain the four basic fees or expenses associated with mutual fund investing. Which expense(s) are the most important for a short-term investor? Which expense(s) are the most important to a long-term investor?

A mutual fund has an offer price of $63.54 and a front-end load of 4.5 percent. If there are 8.5 millions shares outstanding, what are the total assets of the fund assuming the fund has no liabilities?

A mutual fund holds three stocks. The number of shares of each stock is 12,000, 18,000, and 25,000, at a price of $64, $56, and $32, respectively. If the fund has liabilities of $160,000 and 115,000 shares outstanding, what is the NAV per share?

Which of the following is a reason that makes the use of fund performance history problematic?

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

An investment company:

A mutual fund has total net assets of $3.2 million and 150,000 shares. What as the NAV of the fund?

A mutual fund with a NAV of $99.99 has a front-end load of 3 percent. What is the offering price of the fund?

Which of the following types of mutual funds will likely have the most stable net asset value?

A taxable money market mutual fund has a return of 3.8 percent. If you are in a 34 percent tax bracket, what interest rate would you require on a non-taxable income trust to be equally well-off?

The main difference between a closed-end fund and an open-end fund is:

To analyze a mutual fund, we pay the least attention to its

What is a soft-dollar transaction?

Which of the following funds would likely maintain a relatively constant investment percentage in stocks and bonds?

Which of the following mutual funds will be the best in providing current income, safety of principal and liquidity?

You purchase 500 shares of a mutual fund with a front-end load of 5 percent and a NAV of $63.12. The assets of the fund (including reinvested dividends) appreciated at 12 percent for the year, and the fund had total expenses of 1.80 percent. What was your return for the year?

A mutual fund has $840 million in assets and $40,000 in liabilities. There are 35 million shares outstanding. The fund charges a 5% front-end load. What is the offering price of the fund?

You invest $10,000 in a mutual fund at the beginning of the year at a NAV of $32.80. The fund makes a dividend distribution of $0.18 and a capital gains distribution of $0.38. If the NAV at the end of the year is $36.21, what was your return for the year?

A hedge fund is a(n) ___________ investment company that sells its shares to ___________.

Which of the following is inappropriate for investing in a mutual fund?

One year ago, you purchased 300 shares of a mutual fund that had a front-end load of 4%. The NPV at the time of purchase was $55.20. Today, the NAV (including all reinvested dividends) is $56.32 and the total expenses of the fund for the year were 1.65%. What was your return for the year?

List and explain the four basic fees or expenses associated with mutual fund investing. Which expense(s) are the most important for a short-term investor? Which expense(s) are the most important to a long-term investor?

A mutual fund has an offer price of $63.54 and a front-end load of 4.5 percent. If there are 8.5 millions shares outstanding, what are the total assets of the fund assuming the fund has no liabilities?

A mutual fund holds three stocks. The number of shares of each stock is 12,000, 18,000, and 25,000, at a price of $64, $56, and $32, respectively. If the fund has liabilities of $160,000 and 115,000 shares outstanding, what is the NAV per share?

Which of the following is a reason that makes the use of fund performance history problematic?

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

A hedge fund is a(n) _ investment company that sells its shares to _.