Exam 3: Indirect Investing

Morningstar ranks mutual funds based on their performance relative to comparable funds.

A group of mutual funds with a common management are known as:

Load funds generally outperform no-load funds.

With respect to tax efficiency, pass-through tax status is a characteristic that represents:

Explain one major advantage that hedge funds have over long-only funds (mutual funds) with respect to capitalizing on the expertise of investment managers.

Explain why investors chasing hot mutual funds often pay their most significant tax liability in a year when the fund's price drops substantially.

Which of the following is not a characteristic of investments companies?

A 12b-1 fee is a:

The net asset value of a mutual fund does not consider unrealized capital gains.

Wally contacted his investment fund and sold 100 shares directly to the fund. What type of fund does Wally own?

A 12b-1 fee is used to cover a fund's cost of distribution.

Under the Morningstar rating system, one class of mutual fund shares can have a different rating than another share class of the same mutual fund.

Money market funds (MMFs) hold fixed-income securities.

Which of the following types of funds tend to keep 25% of its assets in the securities of U.S. companies?

A U.S. investor has 80% of her portfolio in U.S. securities, if she wishes to establish an international exposure for the remaining 20% she should buy:

Which of the following generally do not trade on stock exchanges?

At 10:00A.m., Homer called his broker and placed an order to purchase a security that represented a claim on the S&P 500. At 2:00 p.m., Homer sold the security and realized a $600 gain. Homer paid his broker a $10 commission on each transaction. The security Homer purchased was:

ETFs are managed investment portfolios that offer investors targeted diversification.

Unlike loads, 12b-1 fees are an annual expense.

Unregulated companies that seek to exploit various market opportunities and require a substantial investment from investors are known as: