Question 1

Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?

Accepted Answer

A) The number of shares outstanding was fixed at the time the fund was created. 
B) If an investor wishes to sell her shares, she must do so by selling to another investor. 
C) The NAV exceeds the offering price. 
D) The load is expressed as a percentage of the NAV. 
E) Investors receive the NAV when shares are sold. 
A) The number of shares outstanding was fixed at the time the fund was created. 
B) If an investor wishes to sell her shares, she must do so by selling to another investor. 
C) The NAV exceeds the offering price. 
D) The load is expressed as a percentage of the NAV. 
E) Investors receive the NAV when shares are sold.

Question 2

You recently purchased a fund at a price of $39.97 per share. The NAV at the time of purchase was $40.67. You must have purchased a(n)________ fund.

Accepted Answer

A) closed-end 
B) global 
C) bond 
D) index 
E) asset allocation 
A) closed-end 
B) global 
C) bond 
D) index 
E) asset allocation

Question 3

Money market mutual funds:

Accepted Answer

A) must be valued at $1 a share or more. 
B) invest only in certificates of deposit. 
C) produce income that is always tax-exempt. 
D) can provide "triple-tax-free" income. 
E) are insured by the FDIC. 
A) must be valued at $1 a share or more. 
B) invest only in certificates of deposit. 
C) produce income that is always tax-exempt. 
D) can provide "triple-tax-free" income. 
E) are insured by the FDIC.

Question 4

The market value of the assets of the Warrior Fund is currently $97.3 million, while its liabilities are $753,000. What is the net asset value of the Warrior Fund if it has 1,750,000 shares outstanding?

Accepted Answer

A) $54.02 
B) $55.17 
C) $56.22 
D) $57.18 
E) $58.25 
A) $54.02 
B) $55.17 
C) $56.22 
D) $57.18 
E) $58.25

Question 5

Which one of the following is the distinguishing characteristic of a municipal bond fund?

Accepted Answer

A) high-yield 
B) federally tax-free income 
C) mortgage backed 
D) short-term 
E) low quality 
A) high-yield 
B) federally tax-free income 
C) mortgage backed 
D) short-term 
E) low quality

Question 6

Which type of stock fund focuses on maximizing share price increases?

Accepted Answer

A) growth and income 
B) large-company 
C) equity income 
D) capital appreciation 
E) aggressive growth 
A) growth and income 
B) large-company 
C) equity income 
D) capital appreciation 
E) aggressive growth

Question 7

An open-end fund which invests solely in short-term debt obligations is called a(n)________ mutual fund.

Accepted Answer

A) growth 
B) stock 
C) money market 
D) asset allocation 
E) balanced 
A) growth 
B) stock 
C) money market 
D) asset allocation 
E) balanced

Question 8

A hedge fund may charge a special performance fee that commonly ranges from:

Accepted Answer

A) 10 to 15 percent of NAV. 
B) 15 to 20 percent of the fund's profits. 
C) 20 to 30 percent of NAV. 
D) 20 to 40 percent of the market price. 
E) 20 to 40 percent of the fund's profits. 
A) 10 to 15 percent of NAV. 
B) 15 to 20 percent of the fund's profits. 
C) 20 to 30 percent of NAV. 
D) 20 to 40 percent of the market price. 
E) 20 to 40 percent of the fund's profits.

Question 9

A fee that is charged at the time mutual fund shares are purchased by an investor is called a:

Accepted Answer

A) contingent deferred sales charge. 
B) 12b-1 fee. 
C) back-end load. 
D) front-end load. 
E) issuance charge. 
A) contingent deferred sales charge. 
B) 12b-1 fee. 
C) back-end load. 
D) front-end load. 
E) issuance charge.

Question 10

Mutual funds are generally created to:

Accepted Answer

A) provide tax shelters for investors. 
B) generate fees for an advisory firm. 
C) eliminate investment risk. 
D) avoid taxes. 
E) avoid regulation. 
A) provide tax shelters for investors. 
B) generate fees for an advisory firm. 
C) eliminate investment risk. 
D) avoid taxes. 
E) avoid regulation.

Question 11

You invested $8,500 in a mutual fund when the offering price was $31.30 and the NAV was $30.20. This purchase was made one year ago today. Today, the fund distributed a total of $1.59 in long-term gains and $.85 in short-term gains. The current offering price is $33.42 and the NAV is $32.18. What is your return for the year?

Accepted Answer

A) 4.35% 
B) 7.37% 
C) 8.23% 
D) 9.46% 
E) 10.61% 
A) 4.35% 
B) 7.37% 
C) 8.23% 
D) 9.46% 
E) 10.61%

Question 12

Which one of the following types of funds is most apt to invest in preferred stocks?

Accepted Answer

A) income 
B) balanced 
C) world 
D) insured 
E) index 
A) income 
B) balanced 
C) world 
D) insured 
E) index

Question 13

You invested $7,000 in a mutual fund 28 months ago when the NAV of the fund was $22.30. You have not acquired or sold any shares since that time. Today, the NAV is $21.50. The fund charges contingent deferred sales charges of 6%, 5%, 4%, 3%, 2%, 2%, and 1% if the shares are redeemed within the first 7 years, respectively. How much money will you receive if you redeem your shares today?

Accepted Answer

A) $6,178.86 
B) $6,275.23 
C) $6,355.00 
D) $6,478.92 
E) $6,508.91 
A) $6,178.86 
B) $6,275.23 
C) $6,355.00 
D) $6,478.92 
E) $6,508.91

Question 14

Five years ago, you purchased 220.80 shares of a mutual fund. Since then, you have reinvested your fund dividends and acquired an additional 35.10 shares. The fund currently has an NAV of $37.60. The fund charges a contingent deferred sales charge of 5% for the first 2 years after which time the charge declines by 1% a year. How much money will you receive if you redeem all your shares today?

Accepted Answer

A) $9,360.32 
B) $9,429.40 
C) $9,510.18 
D) $9,633.75 
E) $9,700.79 
A) $9,360.32 
B) $9,429.40 
C) $9,510.18 
D) $9,633.75 
E) $9,700.79

Question 15

A mutual fund has a current offering price of $35.70. What is the net asset value if the fund charges a 3.75% front-end load?

Accepted Answer

A) $30.74 
B) $31.66 
C) $34.36 
D) $34.86 
E) $34.91 
A) $30.74 
B) $31.66 
C) $34.36 
D) $34.86 
E) $34.91

Question 16

You are investing $16,000 in a mutual fund that charges a 3.50% front-end load. The offering price is $20.32 a share. What will your investment be worth immediately after your shares are purchased?

Accepted Answer

A) $14,520 
B) $14,640 
C) $15,440 
D) $16,360 
E) $16,420 
A) $14,520 
B) $14,640 
C) $15,440 
D) $16,360 
E) $16,420

Question 17

Kenny invested $5,000 in a mutual fund, one year ago, when the offering price was $23.65 per share and the NAV was $23.02 per share. As of today, the fund has distributed a total of $1.34 per share in long-term gains and $.85 per share in short-term gains. The current offering price is $27.71 per share and the NAV is $27.08 per share. What is Kenny's return for the year?

Accepted Answer

A) −5.62% 
B) 20.42% 
C) 23.76% 
D) 24.02% 
E) 25.30% 
A) −5.62% 
B) 20.42% 
C) 23.76% 
D) 24.02% 
E) 25.30%

Question 18

At the beginning of the year, you invested $5,000 in a no-load mutual fund with a NAV of $25.00. At the end of the year, the fund distributed $1.10 per share in short-term earnings and $3.10 per share in long-term earnings. The end-of-year NAV was $24.60. What was your annual rate of return on this investment?

Accepted Answer

A) −5.90% 
B) −1.86% 
C) 11.80% 
D) 15.20% 
E) 17.90% 
A) −5.90% 
B) −1.86% 
C) 11.80% 
D) 15.20% 
E) 17.90%

Question 19

Letter grades are most frequently assigned to mutual funds based on the fund's:

Accepted Answer

A) projected future returns. 
B) historical rates of return. 
C) management style. 
D) portfolio size. 
E) investment objective. 
A) projected future returns. 
B) historical rates of return. 
C) management style. 
D) portfolio size. 
E) investment objective.

Question 20

A mutual fund has a current offering price of $56.70. What is the net asset value if the fund charges a 4.5% front-end load?

Accepted Answer

A) $50.74 
B) $51.66 
C) $54.15 
D) $54.86 
E) $54.91 
A) $50.74 
B) $51.66 
C) $54.15 
D) $54.86 
E) $54.91

Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?

You recently purchased a fund at a price of $39.97 per share. The NAV at the time of purchase was $40.67. You must have purchased a(n)________ fund.

Money market mutual funds:

The market value of the assets of the Warrior Fund is currently $97.3 million, while its liabilities are $753,000. What is the net asset value of the Warrior Fund if it has 1,750,000 shares outstanding?

Which one of the following is the distinguishing characteristic of a municipal bond fund?

Which type of stock fund focuses on maximizing share price increases?

An open-end fund which invests solely in short-term debt obligations is called a(n)________ mutual fund.

A hedge fund may charge a special performance fee that commonly ranges from:

A fee that is charged at the time mutual fund shares are purchased by an investor is called a:

Mutual funds are generally created to:

Which one of the following types of funds is most apt to invest in preferred stocks?

A mutual fund has a current offering price of $35.70. What is the net asset value if the fund charges a 3.75% front-end load?

You are investing $16,000 in a mutual fund that charges a 3.50% front-end load. The offering price is $20.32 a share. What will your investment be worth immediately after your shares are purchased?

Letter grades are most frequently assigned to mutual funds based on the fund's:

A mutual fund has a current offering price of $56.70. What is the net asset value if the fund charges a 4.5% front-end load?

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

Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?

You recently purchased a fund at a price of $39.97 per share. The NAV at the time of purchase was $40.67. You must have purchased a(n)________ fund.

Money market mutual funds:

The market value of the assets of the Warrior Fund is currently $97.3 million, while its liabilities are $753,000. What is the net asset value of the Warrior Fund if it has 1,750,000 shares outstanding?

Which one of the following is the distinguishing characteristic of a municipal bond fund?

Which type of stock fund focuses on maximizing share price increases?

An open-end fund which invests solely in short-term debt obligations is called a(n)________ mutual fund.

A hedge fund may charge a special performance fee that commonly ranges from:

A fee that is charged at the time mutual fund shares are purchased by an investor is called a:

Mutual funds are generally created to:

Which one of the following types of funds is most apt to invest in preferred stocks?

A mutual fund has a current offering price of $35.70. What is the net asset value if the fund charges a 3.75% front-end load?

You are investing $16,000 in a mutual fund that charges a 3.50% front-end load. The offering price is $20.32 a share. What will your investment be worth immediately after your shares are purchased?

Letter grades are most frequently assigned to mutual funds based on the fund's:

A mutual fund has a current offering price of $56.70. What is the net asset value if the fund charges a 4.5% front-end load?

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