Question 1

Shares of exchange-traded funds can be sold _________, and shares of open-end mutual funds can be sold _________.

Accepted Answer

A)  at any time during trading hours; at any time via private trading networks 
B)  only at the end of the day; at any time during trading hours 
C)  at any time via private trading networks; at any time during trading hours 
D)  at any time during trading hours; only at the end of the day 
A)  at any time during trading hours; at any time via private trading networks 
B)  only at the end of the day; at any time during trading hours 
C)  at any time via private trading networks; at any time during trading hours 
D)  at any time during trading hours; only at the end of the day

Question 2

____ funds sell shares to wealthy individuals and financial institutions and use the proceeds to invest in securities.

Accepted Answer

A)  Growth 
B)  Open-end 
C)  Capital appreciation 
D)  Hedge 
E)  Specialty 
A)  Growth 
B)  Open-end 
C)  Capital appreciation 
D)  Hedge 
E)  Specialty

Question 3

Equity real estate investment trusts invest

Accepted Answer

A)  in mortgage and construction loans. 
B)  directly in properties. 
C)  in common stocks issued by construction companies. 
D)  in common stocks issued by real estate brokerage firms. 
A)  in mortgage and construction loans. 
B)  directly in properties. 
C)  in common stocks issued by construction companies. 
D)  in common stocks issued by real estate brokerage firms.

Question 4

A mutual fund prospectus is not required to disclose the

Accepted Answer

A)  minimum amount of investment required. 
B)  return on the fund since its inception in comparison to the returns of other funds in its category. 
C)  investment objective of the mutual fund. 
D)  exposure of the mutual fund to various types of risk. 
E)  fees incurred by the mutual fund and passed on to investors. 
A)  minimum amount of investment required. 
B)  return on the fund since its inception in comparison to the returns of other funds in its category. 
C)  investment objective of the mutual fund. 
D)  exposure of the mutual fund to various types of risk. 
E)  fees incurred by the mutual fund and passed on to investors.

Question 5

Which of the following statements is incorrect?

Accepted Answer

A)  Investors can purchase shares directly from an open-end fund at any time. 
B)  The number of shares of an open-end fund is always changing. 
C)  Open-end funds typically maintain some cash on hand in case investments exceed redemptions. 
D)  There are many different categories of open-end mutual funds. 
A)  Investors can purchase shares directly from an open-end fund at any time. 
B)  The number of shares of an open-end fund is always changing. 
C)  Open-end funds typically maintain some cash on hand in case investments exceed redemptions. 
D)  There are many different categories of open-end mutual funds.

Question 6

If money market fund managers expect interest rates to increase, they will ____ their average asset maturity.

Accepted Answer

A)  not adjust 
B)  shorten 
C)  lengthen 
D)  shorten (if the expected change is small) or lengthen (if the expected change is large) 
A)  not adjust 
B)  shorten 
C)  lengthen 
D)  shorten (if the expected change is small) or lengthen (if the expected change is large)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Diversification among types of mutual funds usually does little to reduce the volatility of returns on the overall investment.

Accepted Answer

A) True 
 B)False

Question 9

Exchange-traded funds can be

Accepted Answer

A)  traded throughout the day. 
B)  purchased on margin. 
C)  sold short. 
D)  all of the above 
A)  traded throughout the day. 
B)  purchased on margin. 
C)  sold short. 
D)  all of the above

Question 10

Hedge funds commonly use financial leverage, which can:

Accepted Answer

A)  magnify their returns and magnify their losses. 
B)  magnify their returns and limit their losses. 
C)  reduce their risk and limit their losses. 
D)  magnify their returns and not affect their risk. 
A)  magnify their returns and magnify their losses. 
B)  magnify their returns and limit their losses. 
C)  reduce their risk and limit their losses. 
D)  magnify their returns and not affect their risk.

Question 11

The net asset value (NAV) is estimated each day by first determining the market value of all securities comprising the mutual fund.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not true with respect to venture capital funds?

Accepted Answer

A)  They typically invest in young, growing firms that need equity funding but are not ready or willing to go public. 
B)  More than half of all VC investing is in businesses that are being created. 
C)  Venture capital funds 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 the above are correct with respect to venture capital funds. 
A)  They typically invest in young, growing firms that need equity funding but are not ready or willing to go public. 
B)  More than half of all VC investing is in businesses that are being created. 
C)  Venture capital funds 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 the above are correct with respect to venture capital funds.

Question 13

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 the above 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 the above are ways in which a mutual fund generates returns to its shareholders.

Question 14

Closed-end funds may sometimes engage in a stock repurchase, in which they purchase shares on the exchange where the shares are listed.

Accepted Answer

A) True 
 B)False

Shares of exchange-traded funds can be sold _, and shares of open-end mutual funds can be sold _.

____ funds sell shares to wealthy individuals and financial institutions and use the proceeds to invest in securities.

Equity real estate investment trusts invest

A mutual fund prospectus is not required to disclose the

Which of the following statements is incorrect?

If money market fund managers expect interest rates to increase, they will ____ their average asset maturity.

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

Diversification among types of mutual funds usually does little to reduce the volatility of returns on the overall investment.

Exchange-traded funds can be

Hedge funds commonly use financial leverage, which can:

The net asset value (NAV) is estimated each day by first determining the market value of all securities comprising the mutual fund.

Which of the following is not true with respect to venture capital funds?

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

Closed-end funds may sometimes engage in a stock repurchase, in which they purchase shares on the exchange where the shares are listed.

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

Exam 23: Mutual Fund Operations

Shares of exchange-traded funds can be sold _________, and shares of open-end mutual funds can be sold _________.

____ funds sell shares to wealthy individuals and financial institutions and use the proceeds to invest in securities.

Equity real estate investment trusts invest

A mutual fund prospectus is not required to disclose the

Which of the following statements is incorrect?

If money market fund managers expect interest rates to increase, they will ____ their average asset maturity.

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

Diversification among types of mutual funds usually does little to reduce the volatility of returns on the overall investment.

Exchange-traded funds can be

Hedge funds commonly use financial leverage, which can:

The net asset value (NAV) is estimated each day by first determining the market value of all securities comprising the mutual fund.

Which of the following is not true with respect to venture capital funds?

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

Closed-end funds may sometimes engage in a stock repurchase, in which they purchase shares on the exchange where the shares are listed.

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

Shares of exchange-traded funds can be sold _, and shares of open-end mutual funds can be sold _.