Question 1

What new rules have resulted from the mutual fund trading abuses?

Accepted Answer

*Increased board independence.
*Keep cli

Question 2

The market value of a mutual fund's assets divided by the number of fund shares outstanding is equal to the

Accepted Answer

A) load charge. 
B) NAV. 
C) expense ratio. 
D) 12b-1 fee. 
E) management fee. 
A) load charge. 
B) NAV. 
C) expense ratio. 
D) 12b-1 fee. 
E) management fee.

Question 3

What are the primary differences between index funds and ETFs?
 What are two examples of ETFs?

Accepted Answer

ETFs are exchange-traded versions of ind

Question 4

The Federal Mutual Fund Commission (FMFC)is the primary regulator of the mutual fund industry.

Accepted Answer

A) True 
 B)False

Question 5

About ___________ of retirement plan investments are in so-called institutional funds,which are funds that manage retirement plans for an institution's employees.

Accepted Answer

A) 40 percent 
B) 50 percent 
C) 60 percent 
D) 70 percent 
E) 80 percent 
A) 40 percent 
B) 50 percent 
C) 60 percent 
D) 70 percent 
E) 80 percent

Question 6

Money market mutual funds (MMMFs)have caused disintermediation at banks at times. This is because MMMFs

Accepted Answer

A) sometimes pay higher interest rates than bank deposits. 
B) are less risky than bank deposits. 
C) are now federally insured,like bank deposits. 
D) offer guaranteed rates of return. 
E) none of the options 
A) sometimes pay higher interest rates than bank deposits. 
B) are less risky than bank deposits. 
C) are now federally insured,like bank deposits. 
D) offer guaranteed rates of return. 
E) none of the options

Question 7

Because of their ability to hedge,the subprime mortgage crisis did not cause any significant losses to hedge funds.

Accepted Answer

A) True 
 B)False

Question 8

Households are the largest owner of money market mutual funds.

Accepted Answer

A) True 
 B)False

Question 9

By type of fund,there are more ______________ funds than any other.

Accepted Answer

A) equity 
B) bond 
C) taxable money market 
D) tax-exempt money market 
E) hybrid 
A) equity 
B) bond 
C) taxable money market 
D) tax-exempt money market 
E) hybrid

Question 10

a(n.___________ fund must hold substantial cash reserves in order to meet fund redemptions from shareholders.

Accepted Answer

A) closed-end 
B) REIT 
C) open-end mutual 
D) ETF 
E) unit trusts 
A) closed-end 
B) REIT 
C) open-end mutual 
D) ETF 
E) unit trusts

Question 11

A fund that has a fixed number of shares outstanding and is traded on an exchange is called a(n)

Accepted Answer

A) open-end mutual fund. 
B) hybrid fund. 
C) market timing fund. 
D) index fund. 
E) closed-end fund. 
A) open-end mutual fund. 
B) hybrid fund. 
C) market timing fund. 
D) index fund. 
E) closed-end fund.

Question 12

How are money market mutual funds similar to and different from bank deposits?

Accepted Answer

Both are safe and earn fairly low rates

Question 13

On Monday an equity mutual fund has cash of $150 and stocks worth $900. The fund has 100 shares outstanding. On Tuesday the stocks fall in value to $800 and 10 shares are then redeemed by the fund. Assuming that the fund uses its cash first to cover redemptions,what is the one-day rate of return to the remaining fund shareholders,and how much cash and stock does the fund now have?

Accepted Answer

The fund pays the selling shareholders t

Question 14

If you invest $10,000 in a mutual fund with a NAV of $50 per share and a 5.5 percent back-end load,you will receive less than 200 shares in the fund.
A back-end load is not paid until fund shares are sold.

Accepted Answer

A) True 
 B)False

Question 15

Actively managed funds find it difficult to consistently earn higher risk-adjusted returns than a broad stock market index. The difference in return between actively managed funds and passively managed index funds can be explained by which of the following?
I. Lower expense ratios at index funds
II. Higher turnover ratios at index funds
III. Differences in returns in sectors of the market and the overall market return

Accepted Answer

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

Question 16

Open-end mutual funds guarantee

Accepted Answer

A) investors a minimum rate of return. 
B) investors a minimum NAV. 
C) to redeem investor's shares upon demand at current NAV. 
D) to earn the rate promised in the prospectus. 
E) none of the options 
A) investors a minimum rate of return. 
B) investors a minimum NAV. 
C) to redeem investor's shares upon demand at current NAV. 
D) to earn the rate promised in the prospectus. 
E) none of the options

Question 17

Hedge funds may be classified into three types based on their investment strategies and risk level. What are the three types and their broad risk levels?
 Many different strategies exist in each type. List one example strategy in each type.

Accepted Answer

The three main types are as follows:
● M

Question 18

Funds that specialize in municipal bonds and certain types of real estate to minimize tax liabilities are called hybrid funds.

Accepted Answer

A) True 
 B)False

Question 19

An open-end mutual fund owns 1,500 shares of Krispy Kreme priced at $12. The fund also owns 1,000 shares of Ben & Jerry's priced at $43,and 2,000 shares of Pepsi priced at $50. The fund itself has 3,500 of its own shares outstanding. What is the NAV of a fund's share? 
 
A. $66 
B. $56 
C. $46 
D. $36 
E. $26

Accepted Answer

Fund A:
$16,000 * (1 - .0575)= $15,080 i

Question 20

Why are mutual funds popular with individual investors?

Accepted Answer

They provide opportunities for small inv

Exam 17: Investment Companies

What new rules have resulted from the mutual fund trading abuses?

The market value of a mutual fund's assets divided by the number of fund shares outstanding is equal to the

What are the primary differences between index funds and ETFs? What are two examples of ETFs?

The Federal Mutual Fund Commission (FMFC)is the primary regulator of the mutual fund industry.

About ___________ of retirement plan investments are in so-called institutional funds,which are funds that manage retirement plans for an institution's employees.

Money market mutual funds (MMMFs)have caused disintermediation at banks at times. This is because MMMFs

Because of their ability to hedge,the subprime mortgage crisis did not cause any significant losses to hedge funds.

Households are the largest owner of money market mutual funds.

By type of fund,there are more ______________ funds than any other.

a(n.___________ fund must hold substantial cash reserves in order to meet fund redemptions from shareholders.

A fund that has a fixed number of shares outstanding and is traded on an exchange is called a(n)

How are money market mutual funds similar to and different from bank deposits?

If you invest $10,000 in a mutual fund with a NAV of $50 per share and a 5.5 percent back-end load,you will receive less than 200 shares in the fund. A back-end load is not paid until fund shares are sold.

Open-end mutual funds guarantee

Hedge funds may be classified into three types based on their investment strategies and risk level. What are the three types and their broad risk levels? Many different strategies exist in each type. List one example strategy in each type.

Funds that specialize in municipal bonds and certain types of real estate to minimize tax liabilities are called hybrid funds.

Why are mutual funds popular with individual investors?

Introduction

Determinants of Interest Rates

Interest Rates and Security Valuation

The Federal Reserve System, Monetary Policy, and Interest Rates

Money Markets

Bond Markets

Mortgage Markets

Stock Markets

Foreign Exchange Markets

Derivative Securities Markets

Commercial Banks: Industry Overview

Commercial Banks Financial Statements and Analysis

Regulation of Commercial Banks

Other Lending Institutions: Savings Institutions, Credit Unions, and Finance Companies

Insurance Companies

Securities Firms and Investment Banks

Pension Funds

Types of Risks Incurred by Financial Institutions

Managing Credit Risk on the Balance Sheet

Managing Liquidity Risk on the Balance Sheet

Managing Interest Rate Risk and Insolvency Risk on the Balance Sheet

Managing Risk Off the Balance Sheet With Derivative Securities

Managing Risk Off the Balance Sheet With Loan Sales and Securitization

Filters