Question 1

Which of the following will exempt a hedge fund from registering with the SEC?

Accepted Answer

A) offering shares to the general public 
B) being in existence for more than two years 
C) limiting sales to individual investors 
D) locking up investor's money for at least two years 
E) exceeding $25 million in assets 
A) offering shares to the general public 
B) being in existence for more than two years 
C) limiting sales to individual investors 
D) locking up investor's money for at least two years 
E) exceeding $25 million in assets

Question 2

Which one of the following statements correctly relates to closed-end funds?

Accepted Answer

A) Closed-end funds must sell at the NAV or above. 
B) The number of shares outstanding changes on a daily basis as shares are sold and repurchased. 
C) Shares in closed-end funds must be held until the funds mature. 
D) Once a fund closes, a new investor is unable to purchase shares in that fund. 
E) Shares of closed-end funds trade just like stocks. 
A) Closed-end funds must sell at the NAV or above. 
B) The number of shares outstanding changes on a daily basis as shares are sold and repurchased. 
C) Shares in closed-end funds must be held until the funds mature. 
D) Once a fund closes, a new investor is unable to purchase shares in that fund. 
E) Shares of closed-end funds trade just like stocks.

Question 3

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 4

A 12b-1 fee is a fee charged by a mutual fund:

Accepted Answer

A) at the time shares are issued. 
B) if shares are sold within a stated period of time. 
C) to cover trading costs. 
D) to pay the fund's managers. 
E) to cover marketing costs. 
A) at the time shares are issued. 
B) if shares are sold within a stated period of time. 
C) to cover trading costs. 
D) to pay the fund's managers. 
E) to cover marketing costs.

Question 5

A mutual fund has a current offering price of $52.31.What is the net asset value if the fund charges a 3 percent front-end load?

Accepted Answer

A) $50.74 
B) $51.66 
C) $54.57 
D) $54.86 
E) $54.91 
A) $50.74 
B) $51.66 
C) $54.57 
D) $54.86 
E) $54.91

Question 6

Which one of the following is a general characteristic of a tax-managed fund?

Accepted Answer

A) low turnover rate 
B) concentration on income-producing securities 
C) high level of realized capital gains 
D) higher trading costs than average funds 
E) matching of dividend income to capital gains 
A) low turnover rate 
B) concentration on income-producing securities 
C) high level of realized capital gains 
D) higher trading costs than average funds 
E) matching of dividend income to capital gains

Question 7

A mutual fund is created by which one of the following parties?

Accepted Answer

A) fund shareholders 
B) fund's board of directors 
C) SEC 
D) investment advisory firm 
E) discount broker 
A) fund shareholders 
B) fund's board of directors 
C) SEC 
D) investment advisory firm 
E) discount broker

Question 8

The net asset value of a money market mutual fund:

Accepted Answer

A) is dependent upon the value of the fund's assets. 
B) is guaranteed to be $1 a share. 
C) fluctuates as new shares are issued and old shares are redeemed. 
D) varies inversely with market interest rates. 
E) is insured by the sponsoring investment advisory firm. 
A) is dependent upon the value of the fund's assets. 
B) is guaranteed to be $1 a share. 
C) fluctuates as new shares are issued and old shares are redeemed. 
D) varies inversely with market interest rates. 
E) is insured by the sponsoring investment advisory firm.

Question 9

The Blue Star Fund has assets with a market value of $10.6 million and liabilities of $607,000. What is the net asset value if there are 185,000 shares outstanding?

Accepted Answer

A) $54.02 
B) $55.00 
C) $56.67 
D) $57.18 
E) $58.25 
A) $54.02 
B) $55.00 
C) $56.67 
D) $57.18 
E) $58.25

Question 10

An investment company will be treated as a "regulated investment company" by the Internal Revenue Service provided that it:
I.invests almost all of its assets in bonds,stocks,and other securities.
II.invests solely in U.S.securities.
III.does not invest more than two percent of its assets in any one security.
IV.passes all its realized investment income through to its shareholders.

Accepted Answer

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

Question 11

An investment company that will repurchase shares at any time is called a(n)_____ fund.

Accepted Answer

A) hedge 
B) closed-end 
C) open-end 
D) public 
E) exchange traded 
A) hedge 
B) closed-end 
C) open-end 
D) public 
E) exchange traded

Question 12

Seven years ago,you purchased 216.34 shares of a mutual fund.Since then,you have reinvested your fund dividends and acquired an additional 31.02 shares.The fund currently has an NAV of $38.06.The fund charges a contingent deferred sales charge of 5 percent for the first 2 years after which time the charge declines by 1 percent a year.How much money will you receive if you redeem all of your shares today?

Accepted Answer

A) $9,320.38 
B) $9,414.52 
C) $9,508.67 
D) $9,603.75 
E) $9,699.79 
A) $9,320.38 
B) $9,414.52 
C) $9,508.67 
D) $9,603.75 
E) $9,699.79

Question 13

Which type of stock fund focuses on maximizing share price appreciation?

Accepted Answer

A) growth and income 
B) large-company 
C) equity income 
D) capital appreciation 
E) growth 
A) growth and income 
B) large-company 
C) equity income 
D) capital appreciation 
E) growth

Question 14

When the offering price and the NAV are the same,you know that a mutual fund is not charging which one of the following fees?

Accepted Answer

A) 12b-1 fee 
B) front-end load 
C) management fee 
D) contingent deferred sales charge 
E) trading costs 
A) 12b-1 fee 
B) front-end load 
C) management fee 
D) contingent deferred sales charge 
E) trading costs

Question 15

The turnover for a mutual fund refers to:

Accepted Answer

A) the length of time an average investor holds fund shares. 
B) a measure of trading activity. 
C) replacing the fund's investment manager. 
D) the annual change in the number of shares outstanding. 
E) the percentage change in the ownership of fund shares. 
A) the length of time an average investor holds fund shares. 
B) a measure of trading activity. 
C) replacing the fund's investment manager. 
D) the annual change in the number of shares outstanding. 
E) the percentage change in the ownership of fund shares.

Question 16

While reviewing mutual fund reports,Alex noticed that a fund was reported as "closed".What is the primary reason for closing a fund?

Accepted Answer

A) all issued shares have been sold 
B) the fund is suffering a loss 
C) the NAV has declined noticeably 
D) the fund has grown too large in size 
E) the fund is underperforming its peers 
A) all issued shares have been sold 
B) the fund is suffering a loss 
C) the NAV has declined noticeably 
D) the fund has grown too large in size 
E) the fund is underperforming its peers

Question 17

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 18

A hedge fund may charge a special performance fee which commonly ranges from:

Accepted Answer

A) 10 to 15 percent of NAV. 
B) 15 to 20 percent of the fund's profits. 
C) 20 to 30 percent of NAV. 
D) 20 to 40 percent of the market price. 
E) 20 to 40 percent of the fund's profits. 
A) 10 to 15 percent of NAV. 
B) 15 to 20 percent of the fund's profits. 
C) 20 to 30 percent of NAV. 
D) 20 to 40 percent of the market price. 
E) 20 to 40 percent of the fund's profits.

Question 19

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

Question 20

Small-cap funds:

Accepted Answer

A) generally focus on dividend-paying stocks. 
B) focus more on capital appreciation than on current income. 
C) are defined as the smallest 20 percent of all funds based on total asset value. 
D) are defined as the 20 percent of funds with the smallest NAVs. 
E) are generally also classified as equity income funds. 
A) generally focus on dividend-paying stocks. 
B) focus more on capital appreciation than on current income. 
C) are defined as the smallest 20 percent of all funds based on total asset value. 
D) are defined as the 20 percent of funds with the smallest NAVs. 
E) are generally also classified as equity income funds.

Which of the following will exempt a hedge fund from registering with the SEC?

Which one of the following statements correctly relates to closed-end funds?

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

A 12b-1 fee is a fee charged by a mutual fund:

A mutual fund has a current offering price of $52.31.What is the net asset value if the fund charges a 3 percent front-end load?

Which one of the following is a general characteristic of a tax-managed fund?

A mutual fund is created by which one of the following parties?

The net asset value of a money market mutual fund:

The Blue Star Fund has assets with a market value of $10.6 million and liabilities of $607,000. What is the net asset value if there are 185,000 shares outstanding?

An investment company that will repurchase shares at any time is called a(n)_____ fund.

Which type of stock fund focuses on maximizing share price appreciation?

When the offering price and the NAV are the same,you know that a mutual fund is not charging which one of the following fees?

The turnover for a mutual fund refers to:

While reviewing mutual fund reports,Alex noticed that a fund was reported as "closed".What is the primary reason for closing a fund?

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

A hedge fund may charge a special performance fee which commonly ranges from:

Which one of the following correctly applies to hedge funds?

Small-cap funds:

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 of the following will exempt a hedge fund from registering with the SEC?

Which one of the following statements correctly relates to closed-end funds?

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

A 12b-1 fee is a fee charged by a mutual fund:

A mutual fund has a current offering price of $52.31.What is the net asset value if the fund charges a 3 percent front-end load?

Which one of the following is a general characteristic of a tax-managed fund?

A mutual fund is created by which one of the following parties?

The net asset value of a money market mutual fund:

The Blue Star Fund has assets with a market value of $10.6 million and liabilities of $607,000. What is the net asset value if there are 185,000 shares outstanding?

An investment company that will repurchase shares at any time is called a(n)_____ fund.

Which type of stock fund focuses on maximizing share price appreciation?

When the offering price and the NAV are the same,you know that a mutual fund is not charging which one of the following fees?

The turnover for a mutual fund refers to:

While reviewing mutual fund reports,Alex noticed that a fund was reported as "closed".What is the primary reason for closing a fund?

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

A hedge fund may charge a special performance fee which commonly ranges from:

Which one of the following correctly applies to hedge funds?

Small-cap funds:

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