Question 1

A fund which tracks the S&P 500 would best be classified as which type of fund?

Accepted Answer

A) sector 
B) global 
C) equity income 
D) index 
E) growth 
A) sector 
B) global 
C) equity income 
D) index 
E) growth

Question 2

You want to buy 1,400 shares of a mutual fund that has an NAV of $26.50.The fund charges a 3.5 percent front-end load.How much will you have to spend to make this purchase?

Accepted Answer

A) $34,878.87 
B) $35,913.00 
C) $36,953.37 
D) $37,333.33 
E) $38,445.60 
A) $34,878.87 
B) $35,913.00 
C) $36,953.37 
D) $37,333.33 
E) $38,445.60

Question 3

An investment company:

Accepted Answer

A) specializes in investing funds on behalf of a financial institution. 
B) is a closed-end fund that invests in real estate. 
C) pools funds from individual investors. 
D) is a specific type of a bank. 
E) is a specialized form of a joint stock company. 
A) specializes in investing funds on behalf of a financial institution. 
B) is a closed-end fund that invests in real estate. 
C) pools funds from individual investors. 
D) is a specific type of a bank. 
E) is a specialized form of a joint stock company.

Question 4

Mutual funds are generally created to:

Accepted Answer

A) provide tax shelters for investors. 
B) generate fees for an advisory firm. 
C) eliminate investment risk. 
D) avoid taxes. 
E) avoid regulation. 
A) provide tax shelters for investors. 
B) generate fees for an advisory firm. 
C) eliminate investment risk. 
D) avoid taxes. 
E) avoid regulation.

Question 5

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 6

Assume a mutual fund is a pure no-load fund.Which of the following costs should an investor still expect to incur?
I.contingent deferred sales charge
II.management fee
III.trading costs
IV.redemption fee

Accepted Answer

A) I, II, and III only 
B) II and III only 
C) II, III, and IV only 
D) I, II, III, and IV 
E) none of the costs listed 
A) I, II, and III only 
B) II and III only 
C) II, III, and IV only 
D) I, II, III, and IV 
E) none of the costs listed

Question 7

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

Question 8

ETFs are:

Accepted Answer

A) limited to diversified index funds. 
B) generally held until they mature. 
C) sponsored primarily by large investment banks. 
D) based on market-cap-weighted indexes only. 
E) claims on shares held in a trust. 
A) limited to diversified index funds. 
B) generally held until they mature. 
C) sponsored primarily by large investment banks. 
D) based on market-cap-weighted indexes only. 
E) claims on shares held in a trust.

Question 9

Shares in closed-end funds:

Accepted Answer

A) can be resold to the fund at any time. 
B) are more popular than shares in open-end funds. 
C) may sell for more or less than the NAV. 
D) are referred to as mutual fund shares. 
E) cannot be resold. 
A) can be resold to the fund at any time. 
B) are more popular than shares in open-end funds. 
C) may sell for more or less than the NAV. 
D) are referred to as mutual fund shares. 
E) cannot be resold.

Question 10

Which one of the following costs can a mutual fund shareholder avoid by holding shares for an extended period of time?

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 11

A tax exempt money market fund has an annual return of 3.76 percent.What is your equivalent taxable rate if you are in a 28 percent marginal tax bracket?

Accepted Answer

A) 3.15 percent 
B) 3.38 percent 
C) 5.22 percent 
D) 6.11 percent 
E) 6.81 percent 
A) 3.15 percent 
B) 3.38 percent 
C) 5.22 percent 
D) 6.11 percent 
E) 6.81 percent

Question 12

Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?

Accepted Answer

A) The number of shares outstanding was fixed at the time the fund was created. 
B) If an investor wishes to sell her shares, she must do so by selling to another investor. 
C) The NAV exceeds the offering price. 
D) The load is expressed as a percentage of the NAV. 
E) Investors receive the NAV when shares are sold. 
A) The number of shares outstanding was fixed at the time the fund was created. 
B) If an investor wishes to sell her shares, she must do so by selling to another investor. 
C) The NAV exceeds the offering price. 
D) The load is expressed as a percentage of the NAV. 
E) Investors receive the NAV when shares are sold.

Question 13

Which one of the following types of funds invests in both stocks and bonds and actively attempts to time the market?

Accepted Answer

A) income 
B) convertible 
C) flexible portfolio 
D) balanced 
E) insured 
A) income 
B) convertible 
C) flexible portfolio 
D) balanced 
E) insured

Question 14

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.

Question 15

Besides size,how else does a mutual fund style box classify equity funds?

Accepted Answer

A) cost and fees as a percent of NAV 
B) taxability at federal, state, and local levels 
C) value versus growth characteristics 
D) age of the fund 
E) short and long-term rates of return 
A) cost and fees as a percent of NAV 
B) taxability at federal, state, and local levels 
C) value versus growth characteristics 
D) age of the fund 
E) short and long-term rates of return

Question 16

Which one of the following types of funds is most apt to invest in preferred stocks?

Accepted Answer

A) income 
B) balanced 
C) world 
D) insured 
E) index 
A) income 
B) balanced 
C) world 
D) insured 
E) index

Question 17

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 18

Which of the following can you do with an ETF that you cannot do with an open-end fund?
I.sell at mid-day prices
II.short sell
III.buy options on them
IV.resell

Accepted Answer

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

Question 19

Today,you are selling shares of an open-end mutual fund and will be charged a CDSC of 3 percent.The price you will receive per share is equal to:

Accepted Answer

A) 103 percent of the opening NAV. 
B) 97 percent of the opening offering price. 
C) 97 percent of the closing NAV. 
D) 103 percent of the closing offering price. 
E) the closing offering price. 
A) 103 percent of the opening NAV. 
B) 97 percent of the opening offering price. 
C) 97 percent of the closing NAV. 
D) 103 percent of the closing offering price. 
E) the closing offering price.

Question 20

The High Growth Technology Fund has an NAV of $51.06 and a 4.4 percent front-end load.What is the offering price?

Accepted Answer

A) $50.84 
B) $51.36 
C) $53.41 
D) $54.53 
E) $55.81 
A) $50.84 
B) $51.36 
C) $53.41 
D) $54.53 
E) $55.81

A fund which tracks the S&P 500 would best be classified as which type of fund?

You want to buy 1,400 shares of a mutual fund that has an NAV of $26.50.The fund charges a 3.5 percent front-end load.How much will you have to spend to make this purchase?

An investment company:

Mutual funds are generally created to:

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

Assume a mutual fund is a pure no-load fund.Which of the following costs should an investor still expect to incur? I.contingent deferred sales charge II.management fee III.trading costs IV.redemption fee

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

ETFs are:

Shares in closed-end funds:

Which one of the following costs can a mutual fund shareholder avoid by holding shares for an extended period of time?

A tax exempt money market fund has an annual return of 3.76 percent.What is your equivalent taxable rate if you are in a 28 percent marginal tax bracket?

Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?

Which one of the following types of funds invests in both stocks and bonds and actively attempts to time the market?

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

Besides size,how else does a mutual fund style box classify equity funds?

Which one of the following types of funds is most apt to invest in preferred stocks?

Which of the following can you do with an ETF that you cannot do with an open-end fund? I.sell at mid-day prices II.short sell III.buy options on them IV.resell

Today,you are selling shares of an open-end mutual fund and will be charged a CDSC of 3 percent.The price you will receive per share is equal to:

The High Growth Technology Fund has an NAV of $51.06 and a 4.4 percent front-end load.What is the offering price?

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

A fund which tracks the S&P 500 would best be classified as which type of fund?

You want to buy 1,400 shares of a mutual fund that has an NAV of $26.50.The fund charges a 3.5 percent front-end load.How much will you have to spend to make this purchase?

An investment company:

Mutual funds are generally created to:

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

Assume a mutual fund is a pure no-load fund.Which of the following costs should an investor still expect to incur? I.contingent deferred sales charge II.management fee III.trading costs IV.redemption fee

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

ETFs are:

Shares in closed-end funds:

Which one of the following costs can a mutual fund shareholder avoid by holding shares for an extended period of time?

A tax exempt money market fund has an annual return of 3.76 percent.What is your equivalent taxable rate if you are in a 28 percent marginal tax bracket?

Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?

Which one of the following types of funds invests in both stocks and bonds and actively attempts to time the market?

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

Besides size,how else does a mutual fund style box classify equity funds?

Which one of the following types of funds is most apt to invest in preferred stocks?

Which of the following can you do with an ETF that you cannot do with an open-end fund? I.sell at mid-day prices II.short sell III.buy options on them IV.resell

Today,you are selling shares of an open-end mutual fund and will be charged a CDSC of 3 percent.The price you will receive per share is equal to:

The High Growth Technology Fund has an NAV of $51.06 and a 4.4 percent front-end load.What is the offering price?

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