Question 1

An investor who buys shares in a closed-end fund for less than the fund's net asset value is said to be buying shares at a _____________________.

Accepted Answer

The answer of An investor who buys shares in a...

Question 2

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

Accepted Answer

A) Unit investment trusts 
B) Closed-end investment companies 
C) Open-end investment companies 
D) Exchange traded funds 
A) Unit investment trusts 
B) Closed-end investment companies 
C) Open-end investment companies 
D) Exchange traded funds

Question 3

An equity mutual fund began the year with a net asset value (NAV)of $6.50 per share.During the year,it received $0.15 of dividend income,$1.25 in realized capital losses,and $0.50 in unrealized capital gains.Ninety percent of the income was distributed to shareholders.Calculate the fund's year-end NAV.

Accepted Answer

None

Question 4

Investment company managers seek to increase assets under management (AUM)since the cost of overseeing additional amounts of money rises less than the revenue rate.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not true regarding ETFs?

Accepted Answer

A) They trade on exchanges like individual stocks. 
B) They can be bought on margin or sold short. 
C) ETFs have been adversely affected by growth in closed-end funds. 
D) Assets held in ETFs exceed assets held in mutual funds. 
A) They trade on exchanges like individual stocks. 
B) They can be bought on margin or sold short. 
C) ETFs have been adversely affected by growth in closed-end funds. 
D) Assets held in ETFs exceed assets held in mutual funds.

Question 6

Both open-end and closed-end investment company shares may sell at a discount from NAV.

Accepted Answer

A) True 
 B)False

Question 7

An unmanaged fixed-income security portfolio handled by an independent trustee is known as a:

Accepted Answer

A) junk bond fund. 
B) closed-end investment company. 
C) unit investment trust. 
D) hedge fund. 
A) junk bond fund. 
B) closed-end investment company. 
C) unit investment trust. 
D) hedge fund.

Question 8

A load fee is a(n):

Accepted Answer

A) type of income tax. 
B) management fee. 
C) origination fee. 
D) sales charge. 
A) type of income tax. 
B) management fee. 
C) origination fee. 
D) sales charge.

Question 9

How is the individual investor's income tax position affected by owning investment company shares compared to owning securities directly?

Accepted Answer

An investor holding mutual fund shares w

Question 10

Total return for a mutual fund includes capital gains less any reinvested dividends.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following types of mutual fund shares typically do not charge a front-end sales charge but do impose a redemption fee that declines over time?

Accepted Answer

A) Class A shares 
B) Class B shares 
C) Class C shares 
D) Class D shares 
A) Class A shares 
B) Class B shares 
C) Class C shares 
D) Class D shares

Question 12

No-load funds charge no sales fee because:

Accepted Answer

A) they are legally prohibited from doing so. 
B) they charge a redemption fee instead. 
C) they have no sales force. 
D) they charge a 12b-1 fee instead. 
A) they are legally prohibited from doing so. 
B) they charge a redemption fee instead. 
C) they have no sales force. 
D) they charge a 12b-1 fee instead.

Question 13

The ___________________________________ requires most investment companies to register with the Securities and Exchange Commission (SEC),the primary federal agency regulating investment companies.

Accepted Answer

Investment

Question 14

List the four basic types of mutual funds: _________________________,
__________________,_________________,and ___________________.

Accepted Answer

money market funds,equity (sto

Question 15

In order to avoid paying income taxes,an investment company must:

Accepted Answer

A) be classified as a non-profit organization. 
B) invest only in municipal bonds. 
C) pass on interest,dividends,and capital gains to the stockholders. 
D) be registered as a closed-end investment company. 
A) be classified as a non-profit organization. 
B) invest only in municipal bonds. 
C) pass on interest,dividends,and capital gains to the stockholders. 
D) be registered as a closed-end investment company.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

What are some advantages investors seek by buying mutual funds or closed-end investment company shares rather than through purchasing securities directly?

Accepted Answer

Substantial diversification even for a s

Question 18

It is not important to have a secondary market for mutual funds because:

Accepted Answer

A) investors hold the securities until maturity. 
B) investors trade between themselves. 
C) investors sell their shares back to the company. 
D) banks will convert investor shares to cash for bank customers. 
A) investors hold the securities until maturity. 
B) investors trade between themselves. 
C) investors sell their shares back to the company. 
D) banks will convert investor shares to cash for bank customers.

Question 19

Investors desiring no-load funds must generally seek them out since there is no sales force.

Accepted Answer

A) True 
 B)False

Question 20

Most unit investment trusts are considered active investments.

Accepted Answer

A) True 
 B)False

Exam 3: Indirect Investing

An investor who buys shares in a closed-end fund for less than the fund's net asset value is said to be buying shares at a _____________________.

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

Investment company managers seek to increase assets under management (AUM)since the cost of overseeing additional amounts of money rises less than the revenue rate.

Which of the following is not true regarding ETFs?

Both open-end and closed-end investment company shares may sell at a discount from NAV.

An unmanaged fixed-income security portfolio handled by an independent trustee is known as a:

A load fee is a(n):

How is the individual investor's income tax position affected by owning investment company shares compared to owning securities directly?

Total return for a mutual fund includes capital gains less any reinvested dividends.

Which of the following types of mutual fund shares typically do not charge a front-end sales charge but do impose a redemption fee that declines over time?

No-load funds charge no sales fee because:

The ___________________________________ requires most investment companies to register with the Securities and Exchange Commission (SEC),the primary federal agency regulating investment companies.

List the four basic types of mutual funds: _________________________, __________________,_________________,and ___________________.

In order to avoid paying income taxes,an investment company must:

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

What are some advantages investors seek by buying mutual funds or closed-end investment company shares rather than through purchasing securities directly?

It is not important to have a secondary market for mutual funds because:

Investors desiring no-load funds must generally seek them out since there is no sales force.

Most unit investment trusts are considered active investments.

Understanding Investments

Investment Alternatives

Securities Markets and Market Indexes

How Securities Are Traded

The Risks and Returns From Investing

Portfolio Theory

Portfolio Selection

Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis and Strategy

Market Efficiency

Economy Market Analysis

Industry Analysis

Company Analysis

Technical Analysis

Bond Yields

Bonds: Analysis and Strategy

Options

Futures

Portfolio Management

Evaluation of Investment Performance

Filters

List the four basic types of mutual funds: _______________, ,_,and ___________.