Question 1

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the Russell 2000 should choose

Accepted Answer

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

Question 2

A mutual fund had year-end assets of $560,000,000 and liabilities of $26,000,000. There were 23,850,000 shares in the fund at year end. What was the mutual fund's net asset value?

Accepted Answer

A)  $22.87 
B)  $22.39 
C)  $22.24 
D)  $17.61 
E)  $19.25 
A)  $22.87 
B)  $22.39 
C)  $22.24 
D)  $17.61 
E)  $19.25

Question 3

At issue, offering prices of open-end funds will often be

Accepted Answer

A)  less than NAV due to loads. 
B)  greater than NAV due to loads. 
C)  less than NAV due to limited demand. 
D)  greater than NAV due to excess demand. 
E)  less than or greater than NAV with no apparent pattern. 
A)  less than NAV due to loads. 
B)  greater than NAV due to loads. 
C)  less than NAV due to limited demand. 
D)  greater than NAV due to excess demand. 
E)  less than or greater than NAV with no apparent pattern.

Question 4

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

Accepted Answer

A)  REITs may be equity trusts or mortgage trusts. 
B)  REITs are usually highly leveraged. 
C)  REITs are similar to closed-end funds. 
D)  REITs may be equity trusts or mortgage trusts and are usually highly leveraged. 
E)  All of the options are true. 
A)  REITs may be equity trusts or mortgage trusts. 
B)  REITs are usually highly leveraged. 
C)  REITs are similar to closed-end funds. 
D)  REITs may be equity trusts or mortgage trusts and are usually highly leveraged. 
E)  All of the options are true.

Question 5

Management fees and other expenses of mutual funds may include

Accepted Answer

A)  only front-end loads. 
B)  onlyback-end loads. 
C)  only 12b-1 charges. 
D)  only front-end and back-end loads. 
E)  front-end loads, back-end loads, and 12b-1 charges. 
A)  only front-end loads. 
B)  onlyback-end loads. 
C)  only 12b-1 charges. 
D)  only front-end and back-end loads. 
E)  front-end loads, back-end loads, and 12b-1 charges.

Question 6

Of the following types of mutual funds, an investor who wishes to invest in a diversified portfolio of foreign stocks (excluding the U.S.) should choose

Accepted Answer

A)  international funds. 
B)  global funds. 
C)  regional funds. 
D)  emerging-market funds. 
A)  international funds. 
B)  global funds. 
C)  regional funds. 
D)  emerging-market funds.

Question 7

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

Accepted Answer

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

Question 8

Multiple Mutual Funds had year-end assets of $457,000,000 and liabilities of $17,000,000. There were 24,300,000 shares in the fund at year end. What was Multiple Mutual's net asset value?

Accepted Answer

A)  $18.11 
B)  $18.81 
C)  $69.96 
D)  $7.00 
E)  $181.07 
A)  $18.11 
B)  $18.81 
C)  $69.96 
D)  $7.00 
E)  $181.07

Question 9

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 10

Which of the following would increase the net asset value of a mutual fund share, assuming all other things remain unchanged?

Accepted Answer

A)  An increase in the number of fund shares outstanding 
B)  An increase in the fund's accounts payable 
C)  A change in the fund's management 
D)  An increase in the value of one of the fund's stocks 
A)  An increase in the number of fund shares outstanding 
B)  An increase in the fund's accounts payable 
C)  A change in the fund's management 
D)  An increase in the value of one of the fund's stocks

Question 11

You purchased shares of a mutual fund at a price of $17 per share at the beginning of the year and paid a front-end load of 5.0%. If the securities in which the fund invested increased in value by 12% during the year, and the fund's expense ratio was 1.0%, your return if you sold the fund at the end of the year would be

Accepted Answer

A)  4.75%. 
B)  5.45%. 
C)  5.65%. 
D)  4.39%. 
A)  4.75%. 
B)  5.45%. 
C)  5.65%. 
D)  4.39%.

Question 12

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

Accepted Answer

A)  21.7%. 
B)  28.0%. 
C)  54.1%. 
D)  73.4%. 
E)  63.5%. 
A)  21.7%. 
B)  28.0%. 
C)  54.1%. 
D)  73.4%. 
E)  63.5%.

Question 13

A mutual fund had average daily assets of $3.0 billion in 2018. The fund sold $600 million worth of stock and purchased $700 million worth of stock during the year. The fund's turnover ratio is

Accepted Answer

A)  27.5%. 
B)  12%. 
C)  15%. 
D)  25%. 
E)  20%. 
A)  27.5%. 
B)  12%. 
C)  15%. 
D)  25%. 
E)  20%.

Question 14

As of 2018, which class of mutual funds had the largest amount of assets invested?

Accepted Answer

A)  Equity funds 
B)  Bond funds 
C)  Mixed asset classes, such as asset allocation funds 
D)  Money market funds 
E)  Global funds 
A)  Equity funds 
B)  Bond funds 
C)  Mixed asset classes, such as asset allocation funds 
D)  Money market funds 
E)  Global funds

Question 15

A mutual fund had year-end assets of $521,000,000 and liabilities of $63,000,000. If the fund NAV was $26.12, how many shares must have been held in the fund?

Accepted Answer

A)  17,534,456 
B)  16,488,372 
C)  18,601,742 
D)  17,542,515 
A)  17,534,456 
B)  16,488,372 
C)  18,601,742 
D)  17,542,515

Question 16

Which of the following is true regarding equity mutual funds? I) They invest primarily in stock.II) They may hold fixed-income securities, as well as stock.III) Most hold money market securities, as well as stock.IV) Two types of equity funds are income funds and growth funds.

Accepted Answer

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

Question 17

The Profitability Fund had NAV per share of $17.50 on January 1, 2018. On December 31 of the same year, the fund's NAV was $19.47. Income distributions were $0.75, and the fund had capital gain distributions of $1.00. Without considering taxes and transactions costs, what rate of return did an investor receive on the Profitability Fund last year?

Accepted Answer

A)  11.26% 
B)  15.54% 
C)  16.97% 
D)  21.26% 
E)  9.83% 
A)  11.26% 
B)  15.54% 
C)  16.97% 
D)  21.26% 
E)  9.83%

Question 18

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the Wilshire 5000 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 19

You purchased shares of a mutual fund at a price of $20 per share at the beginning of the year and paid a front-end load of 6.0%. If the securities in which the fund invested increased in value by 10% during the year, and the fund's expense ratio was 1.5%, your return if you sold the fund at the end of the year would be

Accepted Answer

A)  1.99%. 
B)  2.32%. 
C)  1.65%. 
D)  2.06%. 
E)  None of the options are correct. 
A)  1.99%. 
B)  2.32%. 
C)  1.65%. 
D)  2.06%. 
E)  None of the options are correct.

Question 20

Which of the following statements about money market mutual funds is true?

Accepted Answer

A)  They invest in commercial paper, CDs, and repurchase agreements. 
B)  They usually offer check-writing privileges. 
C)  They are highly leveraged and risky. 
D)  They invest in commercial paper, CDs, and repurchase agreements, and they usually offer check-writing privileges. 
E)  All of the options are true. 
A)  They invest in commercial paper, CDs, and repurchase agreements. 
B)  They usually offer check-writing privileges. 
C)  They are highly leveraged and risky. 
D)  They invest in commercial paper, CDs, and repurchase agreements, and they usually offer check-writing privileges. 
E)  All of the options are true.

Exam 4: Mutual Funds and Other Investment Companies

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the Russell 2000 should choose

A mutual fund had year-end assets of $560,000,000 and liabilities of $26,000,000. There were 23,850,000 shares in the fund at year end. What was the mutual fund's net asset value?

At issue, offering prices of open-end funds will often be

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

Management fees and other expenses of mutual funds may include

Of the following types of mutual funds, an investor who wishes to invest in a diversified portfolio of foreign stocks (excluding the U.S.) should choose

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

Multiple Mutual Funds had year-end assets of $457,000,000 and liabilities of $17,000,000. There were 24,300,000 shares in the fund at year end. What was Multiple Mutual's net asset value?

Which of the following would increase the net asset value of a mutual fund share, assuming all other things remain unchanged?

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

A mutual fund had average daily assets of $3.0 billion in 2018. The fund sold $600 million worth of stock and purchased $700 million worth of stock during the year. The fund's turnover ratio is

As of 2018, which class of mutual funds had the largest amount of assets invested?

A mutual fund had year-end assets of $521,000,000 and liabilities of $63,000,000. If the fund NAV was $26.12, how many shares must have been held in the fund?

Which of the following is true regarding equity mutual funds? I) They invest primarily in stock.II) They may hold fixed-income securities, as well as stock.III) Most hold money market securities, as well as stock.IV) Two types of equity funds are income funds and growth funds.

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the Wilshire 5000 should choose

Which of the following statements about money market mutual funds is true?

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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