Question 1

The closed-end fund index is

Accepted Answer

A)  Value weighted and based on market values. 
B)  Value weighted and based on NAVs. 
C)  Price weighted and based on market values. 
D)  Price weighted and based on NAVs. 
E)  Equally weighted and based on market values. 
A)  Value weighted and based on market values. 
B)  Value weighted and based on NAVs. 
C)  Price weighted and based on market values. 
D)  Price weighted and based on NAVs. 
E)  Equally weighted and based on market values.

Question 2

Which of the following statements regarding the closed-end investment company's net asset value (NAV)is false?

Accepted Answer

A)  NAV is computed throughout the day based on prevailing market prices for the portfolio of securities 
B)  The market price of the shares is determined by how they trade on the exchange 
C)  NAV and market price of a closed-end fund are almost never the same 
D)  No new investment dollars are available for the investment company unless it makes another public sale of securities 
E)  All of the above are true 
A)  NAV is computed throughout the day based on prevailing market prices for the portfolio of securities 
B)  The market price of the shares is determined by how they trade on the exchange 
C)  NAV and market price of a closed-end fund are almost never the same 
D)  No new investment dollars are available for the investment company unless it makes another public sale of securities 
E)  All of the above are true

Question 3

Funds that adjust the asset allocation weights in the portfolio to match the needs of an investor who is nearing retirement are known as

Accepted Answer

A)  Balanced funds 
B)  Flexible portfolio funds 
C)  Lifetime funds 
D)  Money market funds 
E)  Target date funds 
A)  Balanced funds 
B)  Flexible portfolio funds 
C)  Lifetime funds 
D)  Money market funds 
E)  Target date funds

Question 4

The total market value of all assets of a mutual fund divided by the number of shares of the fund is known as the net asset value.

Accepted Answer

A) True 
 B)False

Question 5

A mutual fund typically performs all of the following functions,except

Accepted Answer

A)  Provides alternative risk-return options. 
B)  Eliminates unsystematic risk. 
C)  Provides diversification. 
D)  Derives a risk-adjusted performance that is consistently superior to risk-adjusted net return of the aggregate market. 
E)  Administers the account, keeps records and provides timely information. 
A)  Provides alternative risk-return options. 
B)  Eliminates unsystematic risk. 
C)  Provides diversification. 
D)  Derives a risk-adjusted performance that is consistently superior to risk-adjusted net return of the aggregate market. 
E)  Administers the account, keeps records and provides timely information.

Question 6

The following are examples of mutual fund companies

Accepted Answer

A)  Common stock funds. 
B)  Bond funds. 
C)  Hedge funds. 
D)  a and b 
E)  a, b and c 
A)  Common stock funds. 
B)  Bond funds. 
C)  Hedge funds. 
D)  a and b 
E)  a, b and c

Question 7

The Investment Advisors Act of 1940

Accepted Answer

A)  Contains various anti-fraud provisions and record keeping and reporting requirements for fund advisors. 
B)  Regulates broker-dealers. 
C)  Requires federal registration of all public offerings of securities. 
D)  Regulates the structure and operations of mutual funds. 
E)  Contains a code of ethics and standards of professional conduct. 
A)  Contains various anti-fraud provisions and record keeping and reporting requirements for fund advisors. 
B)  Regulates broker-dealers. 
C)  Requires federal registration of all public offerings of securities. 
D)  Regulates the structure and operations of mutual funds. 
E)  Contains a code of ethics and standards of professional conduct.

Question 8

An investment vehicle that acts like a mutual fund of hedge funds,and allows investors access to managers that might otherwise be unavailable is known as

Accepted Answer

A)  Managed futures funds 
B)  Long-short equity funds 
C)  Fund of funds 
D)  Private equity funds 
E)  Leveraged Buyouts (LBOs) 
A)  Managed futures funds 
B)  Long-short equity funds 
C)  Fund of funds 
D)  Private equity funds 
E)  Leveraged Buyouts (LBOs)

Question 9

Suppose you consider investing $1,000 in a load fund which charges a fee of 2%,and you expect the fund to earn 11% over the next year.Alternatively,you could invest in a no-load fund with similar risk that is expected to earn 7% and charges a 1/2 percent redemption fee.Which is better and by how much?

Accepted Answer

A)  Funds are equal 
B)  No-load fund by $36.98 
C)  Load fund by $45.25 
D)  Load fund by $23.15 
E)  No-load fund by $15.52 
A)  Funds are equal 
B)  No-load fund by $36.98 
C)  Load fund by $45.25 
D)  Load fund by $23.15 
E)  No-load fund by $15.52

Question 10

Suppose Under Mutual Fund owns only the 3 stocks shown below with no liabilities.
$$\begin{array} { c c c } 
\text { Stack } & \text { dhares } & \text { PriEe } \
\hline \mathbf { A } & 2900 & 15 \
\mathrm {~B} & 3100 & 14 \
\mathrm { C } & 3200 & 12
\end{array}$$
The fund originated by selling $500,000 of stock at $50.00 per share.What is its current NAV?

Accepted Answer

A)  $12.53 
B)  $15.29 
C)  $152.90 
D)  $125.30 
E)  None of the above 
A)  $12.53 
B)  $15.29 
C)  $152.90 
D)  $125.30 
E)  None of the above

Question 11

A common hedge fund strategy known as long-short equity is a type of arbitrage strategy.

Accepted Answer

A) True 
 B)False

Question 12

The Securities Act of 1933

Accepted Answer

A)  Contains various anti-fraud provisions and record keeping and reporting requirements for fund advisors. 
B)  Regulates broker-dealers. 
C)  Requires federal registration of all public offerings of securities. 
D)  Regulates the structure and operations of mutual funds. 
E)  Contains a code of ethics and standards of professional conduct. 
A)  Contains various anti-fraud provisions and record keeping and reporting requirements for fund advisors. 
B)  Regulates broker-dealers. 
C)  Requires federal registration of all public offerings of securities. 
D)  Regulates the structure and operations of mutual funds. 
E)  Contains a code of ethics and standards of professional conduct.

Question 13

All investment firms charge annual management fees to compensate the professional manager of the fund.

Accepted Answer

A) True 
 B)False

Question 14

Hedge funds that are organized as a limited partnership

Accepted Answer

A)  Are less restricted in how they make investments than general partnership hedge funds 
B)  Typically have larger abnormal returns than general partnership hedge funds 
C)  Are usually less correlated with traditional asset class investments than general partnership hedge funds 
D)  Have less liquid investments than mutual funds 
E)  None of the above 
A)  Are less restricted in how they make investments than general partnership hedge funds 
B)  Typically have larger abnormal returns than general partnership hedge funds 
C)  Are usually less correlated with traditional asset class investments than general partnership hedge funds 
D)  Have less liquid investments than mutual funds 
E)  None of the above

Question 15

What is the offering price for a mutual fund with a NAV of $22.50 and a load of 5 percent?

Accepted Answer

A)  $21.38 
B)  $21.79 
C)  $22.50 
D)  $23.63 
E)  $27.50 
A)  $21.38 
B)  $21.79 
C)  $22.50 
D)  $23.63 
E)  $27.50

Question 16

In the case of private management firms

Accepted Answer

A)  Investors deal with a fund company and do not have separate accounts tailored to their specific needs. 
B)  Investors deal with a fund company and have separate accounts tailored to their specific needs. 
C)  Investors deal with an asset manager and do not have separate accounts tailored to their specific needs. 
D)  Investors deal with an asset manager have separate accounts tailored to their specific needs. 
E)  None of the above. 
A)  Investors deal with a fund company and do not have separate accounts tailored to their specific needs. 
B)  Investors deal with a fund company and have separate accounts tailored to their specific needs. 
C)  Investors deal with an asset manager and do not have separate accounts tailored to their specific needs. 
D)  Investors deal with an asset manager have separate accounts tailored to their specific needs. 
E)  None of the above.

Question 17

An open-end investment company differs from a closed-end investment company by the way they operate after the initial public offering.

Accepted Answer

A) True 
 B)False

Question 18

The offering price of a load fund equals the NAV of the fund

Accepted Answer

A)  Less an initial requirement. 
B)  Plus a sales charge. 
C)  Plus a sales charge and an administrative fee. 
D)  Less a negotiated discount. 
E)  At its stated value. 
A)  Less an initial requirement. 
B)  Plus a sales charge. 
C)  Plus a sales charge and an administrative fee. 
D)  Less a negotiated discount. 
E)  At its stated value.

Question 19

Funds that normally contain a combination of common stock and fixed income securities are known as

Accepted Answer

A)  Section 401(k) plans. 
B)  Balanced funds. 
C)  Contractual plans. 
D)  Income funds. 
E)  Flexible funds. 
A)  Section 401(k) plans. 
B)  Balanced funds. 
C)  Contractual plans. 
D)  Income funds. 
E)  Flexible funds.

Question 20

Suppose you consider investing $15,000 in a load fund from which a fee of 5% is deducted and you expect the fund to earn 12% over the next year.Alternatively,you could invest in a no load fund which is expected to earn 10% and which takes a 1/2 percent redemption fee.Which is better and by how much?

Accepted Answer

A)  Load fund by $318.45 
B)  No load fund by $457.50 
C)  Funds are equal 
D)  Load fund by $415.10 
E)  No load fund by $211.51 
A)  Load fund by $318.45 
B)  No load fund by $457.50 
C)  Funds are equal 
D)  Load fund by $415.10 
E)  No load fund by $211.51

Exam 24: Professional Money Management, alternative Assets, and Industry Ethics

The closed-end fund index is

Which of the following statements regarding the closed-end investment company's net asset value (NAV)is false?

Funds that adjust the asset allocation weights in the portfolio to match the needs of an investor who is nearing retirement are known as

The total market value of all assets of a mutual fund divided by the number of shares of the fund is known as the net asset value.

A mutual fund typically performs all of the following functions,except

The following are examples of mutual fund companies

The Investment Advisors Act of 1940

An investment vehicle that acts like a mutual fund of hedge funds,and allows investors access to managers that might otherwise be unavailable is known as

Suppose Under Mutual Fund owns only the 3 stocks shown below with no liabilities. Stack dhares PriEe 2900 15 3100 14 3200 12 The fund originated by selling $500,000 of stock at $50.00 per share.What is its current NAV?

A common hedge fund strategy known as long-short equity is a type of arbitrage strategy.

The Securities Act of 1933

All investment firms charge annual management fees to compensate the professional manager of the fund.

Hedge funds that are organized as a limited partnership

What is the offering price for a mutual fund with a NAV of $22.50 and a load of 5 percent?

In the case of private management firms

An open-end investment company differs from a closed-end investment company by the way they operate after the initial public offering.

The offering price of a load fund equals the NAV of the fund

Funds that normally contain a combination of common stock and fixed income securities are known as

An Overview of the Investment Process

The Asset Allocation Decision

The Global Market Investment Decision

Securities Markets: Organization and Operation

Security-Market Indexes

Efficient Capital Markets

An Introduction to Portfolio Management

An Introduction to Asset Pricing Models

Multifactor Models of Risk and Return

Analysis of Financial Statements

Security Valuation Principles

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Equity Portfolio Management Stragtegies

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Swap Contracts,convertible Securities,and Other Embedded Derivatives

Evaluation of Portfolio Performance

Investment Return and Risk Analysis Questions

Investment and Retirement Plans

Calculating Covariance and Correlation Coefficient of Assets

Portfolio Variance and Stock Weight Calculations

Portfolio Optimization with Negative Correlation: Finding Minimum Variance and Weight Allocation

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