Question 1

Investors can sell exchange-traded funds short.

Accepted Answer

A) True 
 B)False

Question 2

Hedge funds that exceed a specified size must register with the

Accepted Answer

A)  Securities and Exchange Commission (SE
C) . 
B)  Federal Reserve. 
C)  Office of Thrift Supervision. 
D)  Federal Mutual Fund Board. 
A)  Securities and Exchange Commission (SE
C) . 
B)  Federal Reserve. 
C)  Office of Thrift Supervision. 
D)  Federal Mutual Fund Board.

Question 3

Mutual fund managers seek securities that are very liquid so that they can easily sell them in the secondary market at any time.

Accepted Answer

A) True 
 B)False

Question 4

The number of exchange-traded funds has declined over the last several years because the cost of managing them was excessive.

Accepted Answer

A) True 
 B)False

Question 5

Venture capital funds typically invest in stocks of publicly traded companies.

Accepted Answer

A) True 
 B)False

Question 6

Large mutual funds can exert some control over the management of firms because they commonly are the largest shareholders.

Accepted Answer

A) True 
 B)False

Question 7

The ____ of a mutual fund indicates the value per share.

Accepted Answer

A)  net asset value 
B)  gross asset value 
C)  net stock value 
D)  net bond value 
E)  none of the above 
A)  net asset value 
B)  gross asset value 
C)  net stock value 
D)  net bond value 
E)  none of the above

Question 8

Most studies that assess mutual fund performance find that mutual funds almost always outperform a benchmark market index.

Accepted Answer

A) True 
 B)False

Question 9

Equity REITs essentially represent fixed-income portfolios, so their market values are heavily influenced by interest rate movements.

Accepted Answer

A) True 
 B)False

Question 10

Mutual funds that are willing to repurchase their shares from investors at any time are referred to as

Accepted Answer

A)  closed-end funds. 
B)  load mutual funds. 
C)  no-load mutual funds. 
D)  open-end mutual funds. 
A)  closed-end funds. 
B)  load mutual funds. 
C)  no-load mutual funds. 
D)  open-end mutual funds.

Question 11

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 12

Investors who feel capable of making their own investment decisions often prefer to invest in load funds.

Accepted Answer

A) True 
 B)False

Question 13

Money market fund assets include all of the following, except

Accepted Answer

A)  stocks. 
B)  repurchase agreements. 
C)  Treasury bills. 
D)  CDs. 
A)  stocks. 
B)  repurchase agreements. 
C)  Treasury bills. 
D)  CDs.

Question 14

Which of the following statements is incorrect?

Accepted Answer

A)  ETFs are like index mutual funds in that the share price adjusts over time in response to changes in the index level. 
B)  ETFs normally do not have capital gains and losses that must be distributed to shareholders. 
C)  The portfolio management of both ETFs and index mutual funds is very complex. 
D)  ETFs can be traded throughout the day. 
A)  ETFs are like index mutual funds in that the share price adjusts over time in response to changes in the index level. 
B)  ETFs normally do not have capital gains and losses that must be distributed to shareholders. 
C)  The portfolio management of both ETFs and index mutual funds is very complex. 
D)  ETFs can be traded throughout the day.

Question 15

Exchange-traded funds (ETFs)?

Accepted Answer

A)  are traded on an exchange, and their share price changes throughout the day. 
B)  represent only bonds. 
C)  are actively managed. 
D)  None of the above is correct. 
A)  are traded on an exchange, and their share price changes throughout the day. 
B)  represent only bonds. 
C)  are actively managed. 
D)  None of the above is correct.

Question 16

Which of the following statements is incorrect?

Accepted Answer

A)  Mutual funds serve as a key financial intermediary. 
B)  Managers of mutual funds do not analyze economic and industry trends. 
C)  Because of their diversification, management expertise, and liquidity, mutual funds have grown at a rapid pace. 
D)  Some mutual funds offer check-writing privileges. 
A)  Mutual funds serve as a key financial intermediary. 
B)  Managers of mutual funds do not analyze economic and industry trends. 
C)  Because of their diversification, management expertise, and liquidity, mutual funds have grown at a rapid pace. 
D)  Some mutual funds offer check-writing privileges.

Question 17

Portfolio managers are hired by the mutual fund to invest in a portfolio of securities that satisfies the desires of investors.

Accepted Answer

A) True 
 B)False

Question 18

If a mutual fund distributes at least ____ percent of its taxable income to shareholders, the fund is exempt from taxes on dividends, interest, and capital gains distributed to shareholders.

Accepted Answer

A)  25 
B)  50 
C)  75 
D)  90 
A)  25 
B)  50 
C)  75 
D)  90

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Mutual funds

Accepted Answer

A)  are unregulated. 
B)  are required to disclose the names of their portfolio managers in the prospectus. 
C)  are not required to disclose any information about their past performance. 
D)  are exempt from all taxes. 
A)  are unregulated. 
B)  are required to disclose the names of their portfolio managers in the prospectus. 
C)  are not required to disclose any information about their past performance. 
D)  are exempt from all taxes.

Exam 23: Mutual Fund Operations

Investors can sell exchange-traded funds short.

Hedge funds that exceed a specified size must register with the

Mutual fund managers seek securities that are very liquid so that they can easily sell them in the secondary market at any time.

The number of exchange-traded funds has declined over the last several years because the cost of managing them was excessive.

Venture capital funds typically invest in stocks of publicly traded companies.

Large mutual funds can exert some control over the management of firms because they commonly are the largest shareholders.

The ____ of a mutual fund indicates the value per share.

Most studies that assess mutual fund performance find that mutual funds almost always outperform a benchmark market index.

Equity REITs essentially represent fixed-income portfolios, so their market values are heavily influenced by interest rate movements.

Mutual funds that are willing to repurchase their shares from investors at any time are referred to as

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

Investors who feel capable of making their own investment decisions often prefer to invest in load funds.

Money market fund assets include all of the following, except

Which of the following statements is incorrect?

Exchange-traded funds (ETFs)?

Which of the following statements is incorrect?

Portfolio managers are hired by the mutual fund to invest in a portfolio of securities that satisfies the desires of investors.

If a mutual fund distributes at least ____ percent of its taxable income to shareholders, the fund is exempt from taxes on dividends, interest, and capital gains distributed to shareholders.

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

Mutual funds

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 Operations

Pension Fund Operations

Filters

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