Question 1

Which one of the following correctly applies to hedge funds?

Accepted Answer

A)  highly liquid 
B)  must be highly diversified 
C)  available to the general public 
D)  vast array of investment objectives 
E)  limited investment options 
A)  highly liquid 
B)  must be highly diversified 
C)  available to the general public 
D)  vast array of investment objectives 
E)  limited investment options D

Question 2

A sector fund:

Accepted Answer

A)  tends to perform consistently from one year to the next. 
B)  is usually highly diversified. 
C)  rarely outperforms other types of funds. 
D)  concentrates on investing in one industry or one commodity. 
E)  is best evaluated by its past performance. 
A)  tends to perform consistently from one year to the next. 
B)  is usually highly diversified. 
C)  rarely outperforms other types of funds. 
D)  concentrates on investing in one industry or one commodity. 
E)  is best evaluated by its past performance. D

Question 3

The primary difference between an international fund and a global fund is the fact that:

Accepted Answer

A)  a global fund invests in U.S. stocks while an international fund does not. 
B)  an international fund invests in U.S. stocks while a global fund does not. 
C)  all international funds are country specific while global funds are not. 
D)  global funds may opt to be country or region specific while international funds may not. 
E)  international funds tend to be more geographically diversified than global funds. 
A)  a global fund invests in U.S. stocks while an international fund does not. 
B)  an international fund invests in U.S. stocks while a global fund does not. 
C)  all international funds are country specific while global funds are not. 
D)  global funds may opt to be country or region specific while international funds may not. 
E)  international funds tend to be more geographically diversified than global funds. A

Question 4

An ETF is best described as:

Accepted Answer

A)  an index fund that trades like a closed-end fund. 
B)  a closed-end fund that trades like a stock. 
C)  a sector fund that trades like a bond. 
D)  an index fund that trades only at the end of each day. 
E)  an international fund that trades like a domestic stock. 
A)  an index fund that trades like a closed-end fund. 
B)  a closed-end fund that trades like a stock. 
C)  a sector fund that trades like a bond. 
D)  an index fund that trades only at the end of each day. 
E)  an international fund that trades like a domestic stock.

Question 5

A taxable money market fund has an annual return of 4.62 percent.What is the equivalent aftertax yield if the tax rate is 27 percent?

Accepted Answer

A)  1.25 percent 
B)  3.37 percent 
C)  4.62 percent 
D)  5.87 percent 
E)  6.13 percent 
A)  1.25 percent 
B)  3.37 percent 
C)  4.62 percent 
D)  5.87 percent 
E)  6.13 percent

Question 6

Money market mutual funds do which one of the following?

Accepted Answer

A)  offer a guaranteed rate of return 
B)  invest in securities that mature in 90 days or less 
C)  provide a risk-free means of investing 
D)  invest only in government bonds 
E)  trade for $10 a share 
A)  offer a guaranteed rate of return 
B)  invest in securities that mature in 90 days or less 
C)  provide a risk-free means of investing 
D)  invest only in government bonds 
E)  trade for $10 a share

Question 7

At the beginning of the year,you invested $7,500 in a no-load mutual fund with a NAV of $30.00.At the end of the year,the fund distributed $1.05 per share in short-term earnings and $3.00 per share in long-term earnings.The end of year NAV was $24.75.What was your annual rate of return on this investment?

Accepted Answer

A)  -4.00 percent 
B)  -1.96 percent 
C)  10.80 percent 
D)  14.20 percent 
E)  16.90 percent 
A)  -4.00 percent 
B)  -1.96 percent 
C)  10.80 percent 
D)  14.20 percent 
E)  16.90 percent

Question 8

Which one of the following trading symbols is associated with the ETF on the S&P 500 index?

Accepted Answer

A)  DIA 
B)  QQQQ 
C)  SPY 
D)  SPX 
E)  DIAX 
A)  DIA 
B)  QQQQ 
C)  SPY 
D)  SPX 
E)  DIAX

Question 9

The Toledo Fund has assets with a market value of $11.5 million and liabilities of $708,000.What is the net asset value if there are 190,000 shares outstanding?

Accepted Answer

A)  $53.02 
B)  $55.00 
C)  $56.80 
D)  $57.18 
E)  $58.25 
A)  $53.02 
B)  $55.00 
C)  $56.80 
D)  $57.18 
E)  $58.25

Question 10

Letter grades are most frequently assigned to mutual funds based on the fund's:

Accepted Answer

A)  projected future returns. 
B)  historical rates of return. 
C)  management style. 
D)  portfolio size. 
E)  investment objective. 
A)  projected future returns. 
B)  historical rates of return. 
C)  management style. 
D)  portfolio size. 
E)  investment objective.

Question 11

The income earned by a regulated investment company is:

Accepted Answer

A)  exempt from all taxation. 
B)  taxed only at the state and local level. 
C)  taxed only at the federal level. 
D)  taxable income for the fund. 
E)  taxable income for the fund's shareholders. 
A)  exempt from all taxation. 
B)  taxed only at the state and local level. 
C)  taxed only at the federal level. 
D)  taxable income for the fund. 
E)  taxable income for the fund's shareholders.

Question 12

Five months ago,you purchased 200 shares of a mutual fund at an offering price of $54 a share.The fund imposes a front-end load of 4.5 percent and has total annual expenses of 1.08 percent.The NAV of the fund today is $52.40.There were no fund distributions during these five months.What is your holding period return on this investment?

Accepted Answer

A)  -2.96 percent 
B)  -1.92 percent 
C)  1.44 percent 
D)  1.89 percent 
E)  2.26 percent 
A)  -2.96 percent 
B)  -1.92 percent 
C)  1.44 percent 
D)  1.89 percent 
E)  2.26 percent

Question 13

Alex invested $10,000 in a mutual fund two and one-half years ago when the NAV of the fund was $25.Today,the NAV has risen to $28.30.Since the time of his original investment,Alex has obtained an additional 54.36 shares by reinvesting the fund distributions.The fund charges a contingent deferred sales charge of 6 percent the first year with the charge decreasing by 1 percent each year.How much money will he receive if he redeems his shares today?

Accepted Answer

A)  $11,633.78 
B)  $11,930.52 
C)  $12,344.05 
D)  $12,858.39 
E)  $13,501.31 
A)  $11,633.78 
B)  $11,930.52 
C)  $12,344.05 
D)  $12,858.39 
E)  $13,501.31

Question 14

The Market Stability Fund owns the following stocks:   The fund has no liabilities and has 57,600 shares outstanding.What is the NAV?

Accepted Answer

A)  $14.72 
B)  $14.88 
C)  $15.47 
D)  $15.95 
E)  $16.02 
A)  $14.72 
B)  $14.88 
C)  $15.47 
D)  $15.95 
E)  $16.02

Question 15

One year ago,you invested $7,000 in the no-load Triple A Money Market Fund.You have neither added to this account nor received any funds from this account since that time.The fund earned a 5.2 percent rate of return for the past year.How many shares of this fund do you currently own?

Accepted Answer

A)  750.00 
B)  796.50 
C)  7,000.00 
D)  7,364.00 
E)  7,965.00 
A)  750.00 
B)  796.50 
C)  7,000.00 
D)  7,364.00 
E)  7,965.00

Question 16

A closed-end fund has total assets of $379 million and liabilities of $640,000.There are 36 million shares outstanding.What is the premium or discount if the shares are currently selling for $9.85 each?

Accepted Answer

A)  7.46 percent discount 
B)  6.28 percent discount 
C)  6.94 percent discount 
D)  6.80 percent premium 
E)  7.46 percent premium 
A)  7.46 percent discount 
B)  6.28 percent discount 
C)  6.94 percent discount 
D)  6.80 percent premium 
E)  7.46 percent premium

Question 17

Which one of the following is the distinguishing characteristic of a municipal bond fund?

Accepted Answer

A)  high-yield 
B)  federally tax-free income 
C)  mortgage backed 
D)  short-term 
E)  low quality 
A)  high-yield 
B)  federally tax-free income 
C)  mortgage backed 
D)  short-term 
E)  low quality

Question 18

The Stone Wall Fund has an offer price of $32.90 and a front-end load of 3.25 percent.What is the net asset value?

Accepted Answer

A)  $31.68 
B)  $31.75 
C)  $31.83 
D)  $32.90 
E)  $34.05 
A)  $31.68 
B)  $31.75 
C)  $31.83 
D)  $32.90 
E)  $34.05

Question 19

If you purchase shares in a closed-end fund at the initial offer price,you should expect to:

Accepted Answer

A)  earn an abnormally high rate of return the first year. 
B)  immediately see a decrease in the value of your investment. 
C)  receive offers to purchase your shares at a premium prior to the official first day of trading. 
D)  earn tax-advantaged income. 
E)  realize a capital gain if you sell your shares as soon as trading in the shares commences. 
A)  earn an abnormally high rate of return the first year. 
B)  immediately see a decrease in the value of your investment. 
C)  receive offers to purchase your shares at a premium prior to the official first day of trading. 
D)  earn tax-advantaged income. 
E)  realize a capital gain if you sell your shares as soon as trading in the shares commences.

Question 20

Investment advisory firms generally provide which of the following services to a mutual fund?
I.marketing
II.record keeping
III.investment research
IV.tax payment

Accepted Answer

A)  I only 
B)  II and III only 
C)  I, II, and III only 
D)  II, III, and IV only 
E)  I, II, III, and IV 
A)  I only 
B)  II and III only 
C)  I, II, and III only 
D)  II, III, and IV only 
E)  I, II, III, and IV

Which one of the following correctly applies to hedge funds?

A sector fund:

The primary difference between an international fund and a global fund is the fact that:

An ETF is best described as:

A taxable money market fund has an annual return of 4.62 percent.What is the equivalent aftertax yield if the tax rate is 27 percent?

Money market mutual funds do which one of the following?

Which one of the following trading symbols is associated with the ETF on the S&P 500 index?

The Toledo Fund has assets with a market value of $11.5 million and liabilities of $708,000.What is the net asset value if there are 190,000 shares outstanding?

Letter grades are most frequently assigned to mutual funds based on the fund's:

The income earned by a regulated investment company is:

The Market Stability Fund owns the following stocks: The fund has no liabilities and has 57,600 shares outstanding.What is the NAV?

One year ago,you invested $7,000 in the no-load Triple A Money Market Fund.You have neither added to this account nor received any funds from this account since that time.The fund earned a 5.2 percent rate of return for the past year.How many shares of this fund do you currently own?

A closed-end fund has total assets of $379 million and liabilities of $640,000.There are 36 million shares outstanding.What is the premium or discount if the shares are currently selling for $9.85 each?

Which one of the following is the distinguishing characteristic of a municipal bond fund?

The Stone Wall Fund has an offer price of $32.90 and a front-end load of 3.25 percent.What is the net asset value?

If you purchase shares in a closed-end fund at the initial offer price,you should expect to:

Investment advisory firms generally provide which of the following services to a mutual fund? I.marketing II.record keeping III.investment research IV.tax payment

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return,Risk,and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Projecting Cash Flow and Earnings

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters

Exam 4: Mutual Funds and Other Investment Companies

Which one of the following correctly applies to hedge funds?

A sector fund:

The primary difference between an international fund and a global fund is the fact that:

An ETF is best described as:

A taxable money market fund has an annual return of 4.62 percent.What is the equivalent aftertax yield if the tax rate is 27 percent?

Money market mutual funds do which one of the following?

Which one of the following trading symbols is associated with the ETF on the S&P 500 index?

The Toledo Fund has assets with a market value of $11.5 million and liabilities of $708,000.What is the net asset value if there are 190,000 shares outstanding?

Letter grades are most frequently assigned to mutual funds based on the fund's:

The income earned by a regulated investment company is:

The Market Stability Fund owns the following stocks: The fund has no liabilities and has 57,600 shares outstanding.What is the NAV?

One year ago,you invested $7,000 in the no-load Triple A Money Market Fund.You have neither added to this account nor received any funds from this account since that time.The fund earned a 5.2 percent rate of return for the past year.How many shares of this fund do you currently own?

A closed-end fund has total assets of $379 million and liabilities of $640,000.There are 36 million shares outstanding.What is the premium or discount if the shares are currently selling for $9.85 each?

Which one of the following is the distinguishing characteristic of a municipal bond fund?

The Stone Wall Fund has an offer price of $32.90 and a front-end load of 3.25 percent.What is the net asset value?

If you purchase shares in a closed-end fund at the initial offer price,you should expect to:

Investment advisory firms generally provide which of the following services to a mutual fund? I.marketing II.record keeping III.investment research IV.tax payment

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return,Risk,and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Projecting Cash Flow and Earnings

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters