Question 1

As of 2012 which class of mutual funds had the largest amount of assets invested

Accepted Answer

A) Equity funds 
B) Bond funds 
C) Mixed asset classes such as asset allocation funds 
D) Money market funds 
E) Global funds 
A) Equity funds 
B) Bond funds 
C) Mixed asset classes such as asset allocation funds 
D) Money market funds 
E) Global funds A

Question 2

A mutual fund had average daily assets of $4.7 billion in 2012.The fund sold $2.2 billion worth of stock and purchased $3.6 billion worth of stock during the year.The fund's turnover ratio is

Accepted Answer

A) 37.5%. 
B) 22.6%. 
C) 15.3%. 
D) 46.8%. 
E) 20.7%. 
A) 37.5%. 
B) 22.6%. 
C) 15.3%. 
D) 46.8%. 
E) 20.7%. D

Question 3

A mutual fund had average daily assets of $2.0 billion in 2012.The fund sold $500 million worth of stock and purchased $600 million worth of stock during the year.The fund's turnover ratio is

Accepted Answer

A) 27.5%. 
B) 12%. 
C) 15%. 
D) 25%. 
E) 20%. 
A) 27.5%. 
B) 12%. 
C) 15%. 
D) 25%. 
E) 20%. D

Question 4

Most actively managed mutual funds, when compared to a market index such as the Wilshire 5000,

Accepted Answer

A) beat the market return in all years. 
B) beat the market return in most years. 
C) exceed the return on index funds. 
D) do not outperform the market. 
A) beat the market return in all years. 
B) beat the market return in most years. 
C) exceed the return on index funds. 
D) do not outperform the market.

Question 5

You purchased shares of a mutual fund at a price of $12 per share at the beginning of the year and paid a front-end load of 4.75%.If the securities in which the fund invested increased in value by 9% during the year, and the fund's expense ratio was 1.5%, your return if you sold the fund at the end of the year would be

Accepted Answer

A) 4.75%. 
B) 3.54%. 
C) 2.65%. 
D) 2.39%. 
A) 4.75%. 
B) 3.54%. 
C) 2.65%. 
D) 2.39%.

Question 6

A mutual fund had year-end assets of $327,000,000 and liabilities of $46,000,000.If the fund NAV was $30.48, how many shares must have been held in the fund

Accepted Answer

A) 11,354,751 
B) 8,412,642 
C) 10,165,476 
D) 9,165,414 
E) 9,219,160 
A) 11,354,751 
B) 8,412,642 
C) 10,165,476 
D) 9,165,414 
E) 9,219,160

Question 7

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the Dow Jones Industrials should choose

Accepted Answer

A) SPY. 
B) DIA. 
C) QQQQ. 
D) IWM. 
E) VTI. 
A) SPY. 
B) DIA. 
C) QQQQ. 
D) IWM. 
E) VTI.

Question 8

A mutual fund had year-end assets of $750,000,000 and liabilities of $7,500,000.There were 40,000,000 shares in the fund at year-end.What was the mutual fund's net asset value

Accepted Answer

A) $9.63 
B) $18.56 
C) $16.42 
D) $17.87 
E) $17.26 
A) $9.63 
B) $18.56 
C) $16.42 
D) $17.87 
E) $17.26

Question 9

Management fees and other expenses of mutual funds may include

Accepted Answer

A) front-end loads. 
B) back-end loads. 
C) 12b-1 charges. 
D) front-end and back-end loads. 
E) front-end loads, back-end loads, and 12b-1 charges. 
A) front-end loads. 
B) back-end loads. 
C) 12b-1 charges. 
D) front-end and back-end loads. 
E) front-end loads, back-end loads, and 12b-1 charges.

Question 10

A mutual fund had NAV per share of $19.00 on January 1, 2012.On December 31 of the same year the fund's NAV was $19.14.Income distributions were $0.57 and the fund had capital gain distributions of $1.12.Without considering taxes and transactions costs, what rate of return did an investor receive on the fund last year

Accepted Answer

A) 11.26% 
B) 10.54% 
C) 7.97% 
D) 8.26% 
E) 9.63% 
A) 11.26% 
B) 10.54% 
C) 7.97% 
D) 8.26% 
E) 9.63%

Question 11

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the MSCI France Index should choose

Accepted Answer

A) SPY. 
B) EWJ. 
C) EWQ. 
D) IWM. 
E) VTI. 
A) SPY. 
B) EWJ. 
C) EWQ. 
D) IWM. 
E) VTI.

Question 12

Which of the following statements about money market mutual funds is true

Accepted Answer

A) They invest in commercial paper, CDs, and repurchase agreements. 
B) They usually offer check-writing privileges. 
C) They are highly leveraged and risky. 
D) They invest in commercial paper, CDs, and repurchase agreements, and they usually offer check-writing privileges. 
E) All of the options are true. 
A) They invest in commercial paper, CDs, and repurchase agreements. 
B) They usually offer check-writing privileges. 
C) They are highly leveraged and risky. 
D) They invest in commercial paper, CDs, and repurchase agreements, and they usually offer check-writing privileges. 
E) All of the options are true.

Question 13

Which of the following is not an advantage of mutual funds

Accepted Answer

A) They offer a variety of investment styles. 
B) They offer small investors the benefits of diversification. 
C) They treat income as "passed through" to the investor for tax purposes. 
D) All of the options are advantages of mutual funds. 
E) None of the options is an advantage of mutual funds. 
A) They offer a variety of investment styles. 
B) They offer small investors the benefits of diversification. 
C) They treat income as "passed through" to the investor for tax purposes. 
D) All of the options are advantages of mutual funds. 
E) None of the options is an advantage of mutual funds.

Question 14

Pools of money invested in a portfolio that is fixed for the life of the fund are called

Accepted Answer

A) closed-end funds. 
B) open-end funds. 
C) unit investment trusts. 
D) REITS. 
E) redeemable trust certificates. 
A) closed-end funds. 
B) open-end funds. 
C) unit investment trusts. 
D) REITS. 
E) redeemable trust certificates.

Question 15

Which of the following functions do investment companies perform for their investors

Accepted Answer

A) Record keeping and administration 
B) Diversification and divisibility 
C) Professional management 
D) Lower transaction costs 
E) All of the options 
A) Record keeping and administration 
B) Diversification and divisibility 
C) Professional management 
D) Lower transaction costs 
E) All of the options

Question 16

In 2012 the proportion of mutual funds (based on total assets) specializing in money market securities was

Accepted Answer

A) 21.7%. 
B) 28.0%. 
C) 54.1%. 
D) 73.4%. 
E) 23.2%. 
A) 21.7%. 
B) 28.0%. 
C) 54.1%. 
D) 73.4%. 
E) 23.2%.

Question 17

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the MSCI Japan Index should choose

Accepted Answer

A) SPY. 
B) EWJ. 
C) QQQQ. 
D) IWM. 
E) VTI. 
A) SPY. 
B) EWJ. 
C) QQQQ. 
D) IWM. 
E) VTI.

Question 18

Commingled funds are

Accepted Answer

A) amounts invested in equity and fixed-income mutual funds. 
B) funds that may be purchased at intervals of 3, 6, or 12 months at the discretion of management. 
C) amounts invested in domestic and global equities. 
D) closed-end funds that may be repurchased only once every two years at the discretion of mutual fund management. 
E) partnerships of investors that pool their funds, which are then managed for a fee. 
A) amounts invested in equity and fixed-income mutual funds. 
B) funds that may be purchased at intervals of 3, 6, or 12 months at the discretion of management. 
C) amounts invested in domestic and global equities. 
D) closed-end funds that may be repurchased only once every two years at the discretion of mutual fund management. 
E) partnerships of investors that pool their funds, which are then managed for a fee.

Question 19

A mutual fund had year-end assets of $465,000,000 and liabilities of $37,000,000.If the fund NAV was $56.12, how many shares must have been held in the fund

Accepted Answer

A) 4,300,000 
B) 6,488,372 
C) 8,601,709 
D) 7,626,515 
E) None of the options 
A) 4,300,000 
B) 6,488,372 
C) 8,601,709 
D) 7,626,515 
E) None of the options

Question 20

What is an exchange-traded fund
 Give two examples of specific ETFs.What are some advantages they have over ordinary open-end mutual funds
 What are some disadvantages

Accepted Answer

ETFs allow investors to trade index port

Exam 4: Mutual Funds and Other Investment Companies

As of 2012 which class of mutual funds had the largest amount of assets invested

A mutual fund had average daily assets of $4.7 billion in 2012.The fund sold $2.2 billion worth of stock and purchased $3.6 billion worth of stock during the year.The fund's turnover ratio is

A mutual fund had average daily assets of $2.0 billion in 2012.The fund sold $500 million worth of stock and purchased $600 million worth of stock during the year.The fund's turnover ratio is

Most actively managed mutual funds, when compared to a market index such as the Wilshire 5000,

A mutual fund had year-end assets of $327,000,000 and liabilities of $46,000,000.If the fund NAV was $30.48, how many shares must have been held in the fund

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the Dow Jones Industrials should choose

A mutual fund had year-end assets of $750,000,000 and liabilities of $7,500,000.There were 40,000,000 shares in the fund at year-end.What was the mutual fund's net asset value

Management fees and other expenses of mutual funds may include

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the MSCI France Index should choose

Which of the following statements about money market mutual funds is true

Which of the following is not an advantage of mutual funds

Pools of money invested in a portfolio that is fixed for the life of the fund are called

Which of the following functions do investment companies perform for their investors

In 2012 the proportion of mutual funds (based on total assets) specializing in money market securities was

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the MSCI Japan Index should choose

Commingled funds are

A mutual fund had year-end assets of $465,000,000 and liabilities of $37,000,000.If the fund NAV was $56.12, how many shares must have been held in the fund

What is an exchange-traded fund Give two examples of specific ETFs.What are some advantages they have over ordinary open-end mutual funds What are some disadvantages

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Optimal Risky Portfolios

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

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