Question 1

Mutual funds composed of bonds that offer periodic coupon payments are

Accepted Answer

A) income funds. 
B) specialty funds. 
C) dividend funds 
D) growth funds. 
A) income funds. 
B) specialty funds. 
C) dividend funds 
D) growth funds. A

Question 2

A mutual fund's expense ratio represents the ____ divided by the fund's ____.

Accepted Answer

A) annual fees charged to investors; 12b-1 fees 
B) annual fees charged to investors; net asset value 
C) initial sales charge (load); 12b-1 fees 
D) initial sales charge (load); net asset value 
A) annual fees charged to investors; 12b-1 fees 
B) annual fees charged to investors; net asset value 
C) initial sales charge (load); 12b-1 fees 
D) initial sales charge (load); net asset value B

Question 3

An investor who believes that technology stocks will perform well but does not want to select individual technology stocks might invest in

Accepted Answer

A) Spiders. 
B) WEBs . 
C) Cubes . 
D) Diamonds . 
A) Spiders. 
B) WEBs . 
C) Cubes . 
D) Diamonds . C

Question 4

Which of the following is NOT correct about money market funds (MMFs)?

Accepted Answer

A) The credit risk of MMFs is normally perceived to be lower than that of corporate bond funds. 
B) MMFs have higher interest rate risk than long-term bond funds. 
C) MMFs are normally characterized as having relatively low risk and low expected returns. 
D) All of these are correct. 
A) The credit risk of MMFs is normally perceived to be lower than that of corporate bond funds. 
B) MMFs have higher interest rate risk than long-term bond funds. 
C) MMFs are normally characterized as having relatively low risk and low expected returns. 
D) All of these are correct.

Question 5

Money market funds are normally perceived to have ____ interest rate risk and ____ credit risk.

Accepted Answer

A) low; high 
B) high; high 
C) high; low 
D) low; low 
A) low; high 
B) high; high 
C) high; low 
D) low; low

Question 6

The expenses incurred by a mutual fund are billed separately to investors and are not included in the calculation of the fund's net asset value (NAV).

Accepted Answer

A) True 
 B)False

Question 7

If interest rates are expected to ________, mortgage real investment trusts (REITs)___________.

Accepted Answer

A) decline; become less attractive 
B) rise; become less attractive 
C) rise; are not affected 
D) decline; are not affected 
A) decline; become less attractive 
B) rise; become less attractive 
C) rise; are not affected 
D) decline; are not affected

Question 8

Exchange-traded funds differ from open-end funds in that their share price is adjusted only at the end of each day.

Accepted Answer

A) True 
 B)False

Question 9

_____ funds contain both stocks and bonds, with the proportions changing automatically as the investor ages.

Accepted Answer

A) Alternative strategy 
B) Automatic allocation 
C) Target date 
D) Age-in-place 
A) Alternative strategy 
B) Automatic allocation 
C) Target date 
D) Age-in-place

Question 10

Exchange-traded funds can be purchased on margin.

Accepted Answer

A) True 
 B)False

Question 11

Index funds are becoming increasingly unpopular because most mutual fund managers consistently outperform indexes.

Accepted Answer

A) True 
 B)False

Question 12

An investment in a(n)____ fund incurs a sales charge.

Accepted Answer

A) load 
B) no-load 
C) closed-end 
D) open-end 
E) None of these are correct. 
A) load 
B) no-load 
C) closed-end 
D) open-end 
E) None of these are correct.

Question 13

Which of the following is NOT true with correct to venture capital (VC)funds?

Accepted Answer

A) They typically invest in young, growing firms that need equity funding but are not ready to go public. 
B) More than half of all VC investing is in businesses that are being created. 
C) They tend to focus on technology firms, which have the potential for high returns but also exhibit a high level of risk. 
D) Because VC funds invest in fairly safe ventures, a low percentage of their ventures fail. 
E) All of these are correct with respect to venture capital funds. 
A) They typically invest in young, growing firms that need equity funding but are not ready to go public. 
B) More than half of all VC investing is in businesses that are being created. 
C) They tend to focus on technology firms, which have the potential for high returns but also exhibit a high level of risk. 
D) Because VC funds invest in fairly safe ventures, a low percentage of their ventures fail. 
E) All of these are correct with respect to venture capital funds.

Question 14

Which of the following is  NOT  a way in which mutual funds generate returns for their shareholders?

Accepted Answer

A) They can pass on any earned income as dividend payments to shareholders. 
B) They distribute the capital gains resulting from the sale of securities within the fund. 
C) The mutual fund price appreciates. 
D) All of these are ways in which a mutual fund generates returns to its shareholders. 
A) They can pass on any earned income as dividend payments to shareholders. 
B) They distribute the capital gains resulting from the sale of securities within the fund. 
C) The mutual fund price appreciates. 
D) All of these are ways in which a mutual fund generates returns to its shareholders.

Question 15

____ funds focus on a group of companies sharing a particular characteristic.

Accepted Answer

A) Specialty 
B) Growth and income 
C) Closed-end 
D) Capital appreciation 
E) None of these are correct. 
A) Specialty 
B) Growth and income 
C) Closed-end 
D) Capital appreciation 
E) None of these are correct.

Question 16

Many businesses that go public are partially backed by venture capital before the IPO. 
 ​

Accepted Answer

A) True 
 B)False

Question 17

Closed-end funds are closed to new investment but allow redemptions by shareholders.

Accepted Answer

A) True 
 B)False

Question 18

The average annual fee on actively managed exchange-traded funds is ________.

Accepted Answer

A) zero 
B) lower than the typical annual fee on open-end mutual funds 
C) higher than the typical annual fee on open-end mutual funds 
D) the same as the typical annual fee on open-end mutual funds 
A) zero 
B) lower than the typical annual fee on open-end mutual funds 
C) higher than the typical annual fee on open-end mutual funds 
D) the same as the typical annual fee on open-end mutual funds

Question 19

The term "mutual funds" is normally used to refer to closed-end funds and does not include open-end funds.

Accepted Answer

A) True 
 B)False

Question 20

Compared to open-end mutual funds, exchange-traded funds generate much more capital gain income that must be distributed to their shareholders, who must pay tax on the gains.

Accepted Answer

A) True 
 B)False

Exam 23: Mutual Fund Operations

Mutual funds composed of bonds that offer periodic coupon payments are

A mutual fund's expense ratio represents the ____ divided by the fund's ____.

An investor who believes that technology stocks will perform well but does not want to select individual technology stocks might invest in

Which of the following is NOT correct about money market funds (MMFs)?

Money market funds are normally perceived to have ____ interest rate risk and ____ credit risk.

The expenses incurred by a mutual fund are billed separately to investors and are not included in the calculation of the fund's net asset value (NAV).

If interest rates are expected to ________, mortgage real investment trusts (REITs)___________.

Exchange-traded funds differ from open-end funds in that their share price is adjusted only at the end of each day.

_____ funds contain both stocks and bonds, with the proportions changing automatically as the investor ages.

Exchange-traded funds can be purchased on margin.

Index funds are becoming increasingly unpopular because most mutual fund managers consistently outperform indexes.

An investment in a(n)____ fund incurs a sales charge.

Which of the following is NOT true with correct to venture capital (VC)funds?

Which of the following is NOT a way in which mutual funds generate returns for their shareholders?

____ funds focus on a group of companies sharing a particular characteristic.

Many businesses that go public are partially backed by venture capital before the IPO. ​

Closed-end funds are closed to new investment but allow redemptions by shareholders.

The average annual fee on actively managed exchange-traded funds is ________.

The term "mutual funds" is normally used to refer to closed-end funds and does not include open-end funds.

Compared to open-end mutual funds, exchange-traded funds generate much more capital gain income that must be distributed to their shareholders, who must pay tax on the gains.

Role of Financial Markets and Institutions

Determination of Interest Rates

Structure of Interest Rates

Functions of the Fed

Monetary Policy

Money Markets

Bond Markets

Bond Valuation and Risk

Mortgage Markets

Stock Offerings and Investor Monitoring

Stock Valuation and Risk

Market Microstructure and Strategies

Financial Futures Markets

Options Markets

Swap Markets

Foreign Exchange Derivative Markets

Commercial Bank Operations

Bank Regulation

Bank Management

Bank Performance

Thrift Operations

Finance Company Operations

Securities Operations

Insurance and Pension Fund Operations

Pension Fund Operations

Filters

A mutual fund's expense ratio represents the divided by the fund's .

Money market funds are normally perceived to have interest rate risk and credit risk.

If interest rates are expected to , mortgage real investment trusts (REITs)___.

Many businesses that go public are partially backed by venture capital before the IPO.