Question 1

An investment company that issues a fixed number of shares which can only be resold in the open stock market is called a(n)________ fund.

Accepted Answer

A) hedge 
B) closed-end 
C) open-end 
D) public 
E) market 
A) hedge 
B) closed-end 
C) open-end 
D) public 
E) market B

Question 2

A sector fund:

Accepted Answer

A) tends to perform consistently from one year to the next. 
B) is usually highly diversified. 
C) rarely outperforms other types of funds. 
D) concentrates on investing in one industry or one commodity. 
E) is best evaluated by its past performance. 
A) tends to perform consistently from one year to the next. 
B) is usually highly diversified. 
C) rarely outperforms other types of funds. 
D) concentrates on investing in one industry or one commodity. 
E) is best evaluated by its past performance. D

Question 3

The European Growth Fund has $820 million in assets and $76,000 in liabilities. There are 30.5 million shares outstanding. The fund charges a 4.4% front-end load. What is the offering price?

Accepted Answer

A) $26.08 
B) $26.47 
C) $27.54 
D) $28.12 
E) $29.74 
A) $26.08 
B) $26.47 
C) $27.54 
D) $28.12 
E) $29.74 D

Question 4

Which one of the following statements correctly relates to closed-end funds?

Accepted Answer

A) Closed-end funds must sell at the NAV or above. 
B) The number of shares outstanding changes on a daily basis as shares are sold and repurchased. 
C) Shares in closed-end funds must be held until the funds mature. 
D) A new investor is unable to purchase shares in a closed-end fund. 
E) Shares of closed-end funds trade just like stocks. 
A) Closed-end funds must sell at the NAV or above. 
B) The number of shares outstanding changes on a daily basis as shares are sold and repurchased. 
C) Shares in closed-end funds must be held until the funds mature. 
D) A new investor is unable to purchase shares in a closed-end fund. 
E) Shares of closed-end funds trade just like stocks.

Question 5

When the offering price and the NAV are the same, you know that a mutual fund is not charging which one of the following fees?

Accepted Answer

A) 12b-1 fee 
B) front-end load 
C) management fee 
D) contingent deferred sales charge 
E) trading costs 
A) 12b-1 fee 
B) front-end load 
C) management fee 
D) contingent deferred sales charge 
E) trading costs

Question 6

Four months ago, Dave purchased 600 shares of a mutual fund with an offering price of $17.50 per share. He paid a 2.50% front-end load and the fund charges total annual expenses of 1.03%. The NAV today is $19.00 per share and the fund has not made any distributions during this period. What is Dave's holding period return on this investment?

Accepted Answer

A) −8.57% 
B) −7.89% 
C) 1.44% 
D) 7.89% 
E) 8.57% 
A) −8.57% 
B) −7.89% 
C) 1.44% 
D) 7.89% 
E) 8.57%

Question 7

Which one of the following is a general characteristic of a tax-managed fund?

Accepted Answer

A) low turnover rate 
B) concentration on income-producing securities 
C) high level of realized capital gains 
D) higher trading costs than average funds 
E) matching of dividend income to capital gains 
A) low turnover rate 
B) concentration on income-producing securities 
C) high level of realized capital gains 
D) higher trading costs than average funds 
E) matching of dividend income to capital gains

Question 8

Which one of the following is not included in the fee table found in a mutual fund prospectus?

Accepted Answer

A) 12b-1 fee 
B) turnover rate 
C) redemption fee percentage 
D) management fee 
E) front-end load 
A) 12b-1 fee 
B) turnover rate 
C) redemption fee percentage 
D) management fee 
E) front-end load

Question 9

One year ago, you invested $7,000 in the no-load Triple A Money Market Fund. You have neither added to this account nor received any funds from this account since that time. The fund earned a 5.2% rate of return for the past year. How many shares of this fund do you currently own?

Accepted Answer

A) 750.00 
B) 796.50 
C) 7,000.00 
D) 7,364.00 
E) 7,965.00 
A) 750.00 
B) 796.50 
C) 7,000.00 
D) 7,364.00 
E) 7,965.00

Question 10

Which one of the following costs can a mutual fund shareholder avoid by holding shares for an extended period of time?

Accepted Answer

A) 12b-1 fee 
B) front-end load 
C) management fee 
D) contingent deferred sales charge 
E) trading costs 
A) 12b-1 fee 
B) front-end load 
C) management fee 
D) contingent deferred sales charge 
E) trading costs

Question 11

Exchange traded notes were first created to mimic ________ index.

Accepted Answer

A) the S&P 500 
B) a commodity 
C) the dollar 
D) the Indian stock market 
E) the DJIA 
A) the S&P 500 
B) a commodity 
C) the dollar 
D) the Indian stock market 
E) the DJIA

Question 12

Which of the following are three key advantages of mutual funds?

Accepted Answer

A) diversification, taxes, high initial investments 
B) low initial investments, professional management, diversification 
C) liquidity, high initial investments, diversification 
D) professional management, high initial investments, taxes 
E) costs, diversification, liquidity 
A) diversification, taxes, high initial investments 
B) low initial investments, professional management, diversification 
C) liquidity, high initial investments, diversification 
D) professional management, high initial investments, taxes 
E) costs, diversification, liquidity

Question 13

The Exploratory Fund is a new closed-end fund which just offered its shares to the public. The fund raised $66.5 million and each share sold for $10. The fee for the fund promoter was 5.75% of the initial proceeds. What was the value of your initial $22,000 purchase before the shares began trading in the marketplace?

Accepted Answer

A) $18,400 
B) $18,700 
C) $19,100 
D) $20,000 
E) $20,735 
A) $18,400 
B) $18,700 
C) $19,100 
D) $20,000 
E) $20,735

Question 14

An investment company will be treated as a "regulated investment company" by the Internal Revenue Service provided that it:
I. invests almost all its assets in bonds, stocks, and other securities.
II. invests solely in U.S. securities.
III. does not invest more than two percent of its assets in any one security.
IV. passes all its realized investment income through to its shareholders.

Accepted Answer

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

Question 15

The Toledo Fund has assets with a market value of $11.5 million and liabilities of $708,000. What is the net asset value if there are 190,000 shares outstanding?

Accepted Answer

A) $53.02 
B) $55.00 
C) $56.80 
D) $57.18 
E) $58.25 
A) $53.02 
B) $55.00 
C) $56.80 
D) $57.18 
E) $58.25

Question 16

Currently, the term "hedge fund" refers to:

Accepted Answer

A) any registered fund with a stated investment objective. 
B) any unregistered fund pursuing any type of investment style. 
C) any fund that equally invests in long and short positions. 
D) any fund that adheres to a "market-neutral" investment strategy. 
E) any private fund that has a minimum investment requirement of $1 million or more. 
A) any registered fund with a stated investment objective. 
B) any unregistered fund pursuing any type of investment style. 
C) any fund that equally invests in long and short positions. 
D) any fund that adheres to a "market-neutral" investment strategy. 
E) any private fund that has a minimum investment requirement of $1 million or more.

Question 17

The Atlas Mutual Fund owns the following stocks:
$\begin{array}{ccc}
\text { Stock } & \text { Shares } & \text { Stock Price } \
\mathrm{X} & 2,600 & \$ 51 \
\mathrm{Y} & 3,800 & \$ 68 \
\mathrm{Z} & 1,900 & \$ 24
\end{array}$

The fund has no liabilities and has 62,000 shares outstanding. What is the NAV?

Accepted Answer

A) $6.32 
B) $6.57 
C) $6.71 
D) $7.04 
E) $7.19 
A) $6.32 
B) $6.57 
C) $6.71 
D) $7.04 
E) $7.19

Question 18

Which one of the following types of bond funds tends to have the highest level of risk?

Accepted Answer

A) short-term government 
B) intermediate-term corporate 
C) treasury 
D) high-yield 
E) single-state municipal 
A) short-term government 
B) intermediate-term corporate 
C) treasury 
D) high-yield 
E) single-state municipal

Question 19

The Stable Utility Fund has an offering price of $54.11 and an NAV of $52.48. What is the front-end load percentage?

Accepted Answer

A) 3.0% 
B) 3.1% 
C) 3.5% 
D) 3.8% 
E) 4.0% 
A) 3.0% 
B) 3.1% 
C) 3.5% 
D) 3.8% 
E) 4.0%

Question 20

The Latest Trend Fund has $2,648,900 in assets, and $1,878,400 in liabilities. How many shares are outstanding if the NAV is $10.07?

Accepted Answer

A) 75,481 
B) 76,514 
C) 77,089 
D) 79,142 
E) 79,638 
A) 75,481 
B) 76,514 
C) 77,089 
D) 79,142 
E) 79,638

An investment company that issues a fixed number of shares which can only be resold in the open stock market is called a(n)________ fund.

A sector fund:

The European Growth Fund has $820 million in assets and $76,000 in liabilities. There are 30.5 million shares outstanding. The fund charges a 4.4% front-end load. What is the offering price?

Which one of the following statements correctly relates to closed-end funds?

When the offering price and the NAV are the same, you know that a mutual fund is not charging which one of the following fees?

Which one of the following is a general characteristic of a tax-managed fund?

Which one of the following is not included in the fee table found in a mutual fund prospectus?

One year ago, you invested $7,000 in the no-load Triple A Money Market Fund. You have neither added to this account nor received any funds from this account since that time. The fund earned a 5.2% rate of return for the past year. How many shares of this fund do you currently own?

Which one of the following costs can a mutual fund shareholder avoid by holding shares for an extended period of time?

Exchange traded notes were first created to mimic ________ index.

Which of the following are three key advantages of mutual funds?

The Toledo Fund has assets with a market value of $11.5 million and liabilities of $708,000. What is the net asset value if there are 190,000 shares outstanding?

Currently, the term "hedge fund" refers to:

The Atlas Mutual Fund owns the following stocks: Stock Shares Stock Price 2,600 \ 51 3,800 \ 68 1,900 \ 24 The fund has no liabilities and has 62,000 shares outstanding. What is the NAV?

Which one of the following types of bond funds tends to have the highest level of risk?

The Stable Utility Fund has an offering price of $54.11 and an NAV of $52.48. What is the front-end load percentage?

The Latest Trend Fund has $2,648,900 in assets, and $1,878,400 in liabilities. How many shares are outstanding if the NAV is $10.07?

A Brief History of Risk and Return

The Investment Process

Overview of Security Tips

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Alternative Investments

Corporate and Government Bonds

Projecting Cash Flow and Earnings

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters

Exam 4: Mutual Funds and Other Investment Companies

An investment company that issues a fixed number of shares which can only be resold in the open stock market is called a(n)________ fund.

A sector fund:

The European Growth Fund has $820 million in assets and $76,000 in liabilities. There are 30.5 million shares outstanding. The fund charges a 4.4% front-end load. What is the offering price?

Which one of the following statements correctly relates to closed-end funds?

When the offering price and the NAV are the same, you know that a mutual fund is not charging which one of the following fees?

Which one of the following is a general characteristic of a tax-managed fund?

Which one of the following is not included in the fee table found in a mutual fund prospectus?

One year ago, you invested $7,000 in the no-load Triple A Money Market Fund. You have neither added to this account nor received any funds from this account since that time. The fund earned a 5.2% rate of return for the past year. How many shares of this fund do you currently own?

Which one of the following costs can a mutual fund shareholder avoid by holding shares for an extended period of time?

Exchange traded notes were first created to mimic ________ index.

Which of the following are three key advantages of mutual funds?

The Toledo Fund has assets with a market value of $11.5 million and liabilities of $708,000. What is the net asset value if there are 190,000 shares outstanding?

Currently, the term "hedge fund" refers to:

The Atlas Mutual Fund owns the following stocks: Stock Shares Stock Price 2,600 \ 51 3,800 \ 68 1,900 \ 24 The fund has no liabilities and has 62,000 shares outstanding. What is the NAV?

Which one of the following types of bond funds tends to have the highest level of risk?

The Stable Utility Fund has an offering price of $54.11 and an NAV of $52.48. What is the front-end load percentage?

The Latest Trend Fund has $2,648,900 in assets, and $1,878,400 in liabilities. How many shares are outstanding if the NAV is $10.07?

A Brief History of Risk and Return

The Investment Process

Overview of Security Tips

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Alternative Investments

Corporate and Government Bonds

Projecting Cash Flow and Earnings

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters