Question 1

Contingent deferred sales charges:

Accepted Answer

A) are applied at the time fund shares are purchased. 
B) are applied only to front-end load funds. 
C) are charged on an annual basis to cover distribution and marketing costs. 
D) are no longer permissible. 
E) can be avoided. 
A) are applied at the time fund shares are purchased. 
B) are applied only to front-end load funds. 
C) are charged on an annual basis to cover distribution and marketing costs. 
D) are no longer permissible. 
E) can be avoided.

Question 2

Which type of fund should you purchase if you are interested in investing primarily in countries that have relatively new stock markets?

Accepted Answer

A) international fund 
B) emerging markets fund 
C) social conscience fund 
D) global fund 
E) sector fund 
A) international fund 
B) emerging markets fund 
C) social conscience fund 
D) global fund 
E) sector fund

Question 3

Which type of investor is most apt to purchase municipal bond funds and why?

Accepted Answer

The answer of Which type of investor is most apt...

Question 4

Rose wants to invest in a bond fund.She is a very conservative investor with a high marginal tax rate.Which one of the following types of bond funds might be most suited for her situation?

Accepted Answer

A) high-yield corporate 
B) long-term world 
C) short-term municipal 
D) single-state corporate 
E) mortgage 
A) high-yield corporate 
B) long-term world 
C) short-term municipal 
D) single-state corporate 
E) mortgage

Question 5

An open-end fund which invests solely in short-term debt obligations is called a(n)_____ mutual fund.

Accepted Answer

A) growth 
B) stock 
C) money market 
D) asset allocation 
E) balanced 
A) growth 
B) stock 
C) money market 
D) asset allocation 
E) balanced

Question 6

You invested $5,000 in a mutual fund 27 months ago when the NAV of the fund was $30.00.You have not acquired or sold any shares since that time.Today,the NAV is $28.40.The fund charges a contingent deferred sales charge of 6,5,4,3,2,2,and 1 percent if the shares are redeemed within the first 7 years,respectively.How much money will you receive if you redeem your shares today?

Accepted Answer

A) $4,383 
B) $4,450 
C) $4,544 
D) $4,748 
E) $4,801 
A) $4,383 
B) $4,450 
C) $4,544 
D) $4,748 
E) $4,801

Question 7

The Stable Utility Fund has an offering price of $54.11 and an NAV of $52.48.What is the front-end load percentage?

Accepted Answer

A) 3.0 percent 
B) 3.1 percent 
C) 3.5 percent 
D) 3.8 percent 
E) 4.0 percent 
A) 3.0 percent 
B) 3.1 percent 
C) 3.5 percent 
D) 3.8 percent 
E) 4.0 percent

Question 8

Jim has managed to save $1,000 and wants to start investing.The financial markets make him nervous as he has very limited financial resources.Which one of the following types of funds is probably best for Jim at this time?

Accepted Answer

A) sector 
B) aggressive growth 
C) social conscience 
D) high yield 
E) balanced 
A) sector 
B) aggressive growth 
C) social conscience 
D) high yield 
E) balanced

Question 9

You recently purchased a fund at a price of $39.97 per share.The NAV at the time of purchase was $40.67.You must have purchased a(n)_____ fund.

Accepted Answer

A) closed-end 
B) global 
C) bond 
D) index 
E) asset allocation 
A) closed-end 
B) global 
C) bond 
D) index 
E) asset allocation

Question 10

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 11

Eastern States Mutual Fund sold $82.5 million of assets during the year and purchased $93 million of new assets.The average daily assets of the fund were $330 million.What is the fund's turnover rate for the year?

Accepted Answer

A) .25 
B) .27 
C) .52 
D) .94 
E) 1.07 
A) .25 
B) .27 
C) .52 
D) .94 
E) 1.07

Question 12

An investment company that issues a fixed number of shares which can only be resold in the open stock market is called a(n)_____ fund.

Accepted Answer

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

Question 13

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 14

A hedge fund:

Accepted Answer

A) may charge relatively high fees. 
B) must be registered if there are ten or more investors. 
C) is generally structured as a corporation. 
D) is limited to $1 million in assets. 
E) is fairly complicated to legally establish. 
A) may charge relatively high fees. 
B) must be registered if there are ten or more investors. 
C) is generally structured as a corporation. 
D) is limited to $1 million in assets. 
E) is fairly complicated to legally establish.

Question 15

Mutual fund trading costs:

Accepted Answer

A) are computed as a percentage of a fund's assets. 
B) are generally set at a flat amount per year. 
C) generally include a bonus fee for outperforming an index. 
D) increase in direct relation to the turnover rate. 
E) are the costs paid to brokers in the form of sales commissions. 
A) are computed as a percentage of a fund's assets. 
B) are generally set at a flat amount per year. 
C) generally include a bonus fee for outperforming an index. 
D) increase in direct relation to the turnover rate. 
E) are the costs paid to brokers in the form of sales commissions.

Question 16

The value of a load mutual fund's assets less its liabilities,divided by the number of shares outstanding is referred to as the fund's:

Accepted Answer

A) net asset value. 
B) offering price. 
C) open-end value. 
D) closed-end value. 
E) prime value. 
A) net asset value. 
B) offering price. 
C) open-end value. 
D) closed-end value. 
E) prime value.

Question 17

Which of the following are three key advantages of mutual funds?

Accepted Answer

A) diversification, taxes, high initial investments 
B) low initial investments, professional management, diversification 
C) liquidity, high initial investments, diversification 
D) professional management, high initial investments, taxes 
E) costs, diversification, liquidity 
A) diversification, taxes, high initial investments 
B) low initial investments, professional management, diversification 
C) liquidity, high initial investments, diversification 
D) professional management, high initial investments, taxes 
E) costs, diversification, liquidity

Question 18

A mutual fund has an NAV of $9.55 with 272,400 shares outstanding.What is the value of the fund's assets if it has $350,400 in liabilities?

Accepted Answer

A) $2,844,537 
B) $2,951,820 
C) $3,055,380 
D) $3,187,019 
E) $3,267,337 
A) $2,844,537 
B) $2,951,820 
C) $3,055,380 
D) $3,187,019 
E) $3,267,337

Question 19

A mutual fund is owned by:

Accepted Answer

A) its shareholders. 
B) a management company. 
C) a financial institution. 
D) the fund's board of directors. 
E) a mutual fund family. 
A) its shareholders. 
B) a management company. 
C) a financial institution. 
D) the fund's board of directors. 
E) a mutual fund family.

Question 20

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

Contingent deferred sales charges:

Which type of fund should you purchase if you are interested in investing primarily in countries that have relatively new stock markets?

Which type of investor is most apt to purchase municipal bond funds and why?

Rose wants to invest in a bond fund.She is a very conservative investor with a high marginal tax rate.Which one of the following types of bond funds might be most suited for her situation?

An open-end fund which invests solely in short-term debt obligations is called a(n)_____ mutual fund.

The Stable Utility Fund has an offering price of $54.11 and an NAV of $52.48.What is the front-end load percentage?

Jim has managed to save $1,000 and wants to start investing.The financial markets make him nervous as he has very limited financial resources.Which one of the following types of funds is probably best for Jim at this time?

You recently purchased a fund at a price of $39.97 per share.The NAV at the time of purchase was $40.67.You must have purchased a(n)_____ fund.

The income earned by a regulated investment company is:

Eastern States Mutual Fund sold $82.5 million of assets during the year and purchased $93 million of new assets.The average daily assets of the fund were $330 million.What is the fund's turnover rate for the year?

An investment company that issues a fixed number of shares which can only be resold in the open stock market is called a(n)_____ fund.

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?

A hedge fund:

Mutual fund trading costs:

The value of a load mutual fund's assets less its liabilities,divided by the number of shares outstanding is referred to as the fund's:

Which of the following are three key advantages of mutual funds?

A mutual fund has an NAV of $9.55 with 272,400 shares outstanding.What is the value of the fund's assets if it has $350,400 in liabilities?

A mutual fund is owned by:

Money market mutual funds do which one of the following?

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

Contingent deferred sales charges:

Which type of fund should you purchase if you are interested in investing primarily in countries that have relatively new stock markets?

Which type of investor is most apt to purchase municipal bond funds and why?

Rose wants to invest in a bond fund.She is a very conservative investor with a high marginal tax rate.Which one of the following types of bond funds might be most suited for her situation?

An open-end fund which invests solely in short-term debt obligations is called a(n)_____ mutual fund.

The Stable Utility Fund has an offering price of $54.11 and an NAV of $52.48.What is the front-end load percentage?

Jim has managed to save $1,000 and wants to start investing.The financial markets make him nervous as he has very limited financial resources.Which one of the following types of funds is probably best for Jim at this time?

You recently purchased a fund at a price of $39.97 per share.The NAV at the time of purchase was $40.67.You must have purchased a(n)_____ fund.

The income earned by a regulated investment company is:

Eastern States Mutual Fund sold $82.5 million of assets during the year and purchased $93 million of new assets.The average daily assets of the fund were $330 million.What is the fund's turnover rate for the year?

An investment company that issues a fixed number of shares which can only be resold in the open stock market is called a(n)_____ fund.

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?

A hedge fund:

Mutual fund trading costs:

The value of a load mutual fund's assets less its liabilities,divided by the number of shares outstanding is referred to as the fund's:

Which of the following are three key advantages of mutual funds?

A mutual fund has an NAV of $9.55 with 272,400 shares outstanding.What is the value of the fund's assets if it has $350,400 in liabilities?

A mutual fund is owned by:

Money market mutual funds do which one of the following?

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