Question 1

Of the following types of ETFs,an investor that wishes to invest in a diversified portfolio that tracks the Nasdaq 100 should choose

Accepted Answer

A) SPY. 
B) DIA. 
C) QQQQ. 
D) IWM. 
E) VTI. 
A) SPY. 
B) DIA. 
C) QQQQ. 
D) IWM. 
E) VTI. C

Question 2

In 2009 the proportion of mutual funds (based on total assets)specializing in money market securities was

Accepted Answer

A) 21.7% 
B) 28.0% 
C) 54.1% 
D) 73.4% 
E) 39.9% 
A) 21.7% 
B) 28.0% 
C) 54.1% 
D) 73.4% 
E) 39.9% E

Question 3

Investors in closed-end funds who wish to liquidate their positions must

Accepted Answer

A) sell their shares through a broker. 
B) sell their shares to the issuer at a discount to Net Asset Value. 
C) sell their shares to the issuer at a premium to Net Asset Value. 
D) sell their shares to the issuer for Net Asset Value. 
E) hold their shares to maturity. 
A) sell their shares through a broker. 
B) sell their shares to the issuer at a discount to Net Asset Value. 
C) sell their shares to the issuer at a premium to Net Asset Value. 
D) sell their shares to the issuer for Net Asset Value. 
E) hold their shares to maturity. A

Question 4

A mutual fund had average daily assets of $4.0 billion in 2009.The fund sold $1.5 billion worth of stock and purchased $1.6 billion worth of stock during the year.The fund's turnover ratio is ____________.

Accepted Answer

A) 37.5% 
B) 22% 
C) 15% 
D) 45% 
E) 20% 
A) 37.5% 
B) 22% 
C) 15% 
D) 45% 
E) 20%

Question 5

Multiple Mutual Funds had year-end assets of $457,000,000 and liabilities of $17,000,000.There were 24,300,000 shares in the fund at year-end.What was Multiple Mutual's Net Asset Value?

Accepted Answer

A) $18.11 
B) $18.81 
C) $69.96 
D) $7.00 
E) $181.07 
A) $18.11 
B) $18.81 
C) $69.96 
D) $7.00 
E) $181.07

Question 6

Most actively managed mutual funds,when compared to a market index such as the Wilshire 5000,

Accepted Answer

A) beat the market return in all years. 
B) beat the market return in most years. 
C) exceed the return on index funds. 
D) do not outperform the market. 
E) None of the above is a correct statement. 
A) beat the market return in all years. 
B) beat the market return in most years. 
C) exceed the return on index funds. 
D) do not outperform the market. 
E) None of the above is a correct statement.

Question 7

A mutual fund had average daily assets of $2.0 billion in 2009.The fund sold $500 million worth of stock and purchased $600 million worth of stock during the year.The fund's turnover ratio is ___.

Accepted Answer

A) 27.5% 
B) 12% 
C) 15% 
D) 25% 
E) 20% 
A) 27.5% 
B) 12% 
C) 15% 
D) 25% 
E) 20%

Question 8

Growth Fund had year-end assets of $862,000,000 and liabilities of $12,000,000.There were 32,675,254 shares in the fund at year-end.What was Growth Fund's Net Asset Value?

Accepted Answer

A) $28.17 
B) $25.24 
C) $19.62 
D) $26.01 
E) $21.56 
A) $28.17 
B) $25.24 
C) $19.62 
D) $26.01 
E) $21.56

Question 9

Which of the following is true regarding equity mutual funds?
I.They invest primarily in stock.
II.They may hold fixed-income securities as well as stock.
III.Most hold money market securities as well as stock.
IV.Two types of equity funds are income funds and growth funds.

Accepted Answer

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

Question 10

Which of the following would increase the net asset value of a mutual fund share,assuming all other things remain unchanged?

Accepted Answer

A) An increase in the number of fund shares outstanding 
B) An increase in the fund's accounts payable 
C) A change in the fund's management 
D) An increase in the value of one of the fund's stocks 
E) none of the above 
A) An increase in the number of fund shares outstanding 
B) An increase in the fund's accounts payable 
C) A change in the fund's management 
D) An increase in the value of one of the fund's stocks 
E) none of the above

Question 11

Which of the following functions do investment companies perform for their investors?

Accepted Answer

A) Record keeping and administration 
B) Diversification and divisibility 
C) Professional management 
D) Lower transaction costs 
E) All of the above. 
A) Record keeping and administration 
B) Diversification and divisibility 
C) Professional management 
D) Lower transaction costs 
E) All of the above.

Question 12

Which of the following characteristics apply to unit investment trusts?
I.Most are invested in fixed-income portfolios.
II.They are actively managed portfolios.
III.The sponsor pools securities,then sells public shares in the trust.
IV.The portfolio is fixed for the life of the fund.

Accepted Answer

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

Question 13

In 2009 the proportion of hybrid (bond and stock)mutual funds (based on total assets)was

Accepted Answer

A) 21.7% 
B) 28.0% 
C) 54.1% 
D) 5.2% 
E) 22.6% 
A) 21.7% 
B) 28.0% 
C) 54.1% 
D) 5.2% 
E) 22.6%

Question 14

Management fees and other expenses of mutual funds may include

Accepted Answer

A) front-end loads. 
B) back-end loads. 
C) 12b-1 charges. 
D) A and B only. 
E) A,B and C. 
A) front-end loads. 
B) back-end loads. 
C) 12b-1 charges. 
D) A and B only. 
E) A,B and C.

Question 15

You purchased shares of a mutual fund at a price of $20 per share at the beginning of the year and paid a front-end load of 5.75%.If the securities in which the fund invested increased in value by 11% during the year,and the fund's expense ratio was 1.25%,your return if you sold the fund at the end of the year would be ____________%.

Accepted Answer

A) 4.33 
B) 3.44 
C) 2.45 
D) 6.87 
E) None of the above 
A) 4.33 
B) 3.44 
C) 2.45 
D) 6.87 
E) None of the above

Question 16

A mutual fund had NAV per share of $37.12 on January 1,2009.On December 31 of the same year the fund's rate of return for the year was 11.0%.Income distributions were $2.26 and the fund had capital gain distributions of $1.64.Without considering taxes and transactions costs,what ending NAV would you calculate?

Accepted Answer

A) $37.93 
B) $34.52 
C) $37.30 
D) $47.25 
E) $36.28 
A) $37.93 
B) $34.52 
C) $37.30 
D) $47.25 
E) $36.28

Question 17

Of the following types of ETFs,an investor that wishes to invest in a diversified portfolio that tracks the S&P 500 should choose

Accepted Answer

A) SPY. 
B) DIA. 
C) QQQQ. 
D) IWM. 
E) VTI. 
A) SPY. 
B) DIA. 
C) QQQQ. 
D) IWM. 
E) VTI.

Question 18

Diversified Portfolios had year-end assets of $279,000,000 and liabilities of $43,000,000.If Diversified's NAV was $42.13,how many shares must have been held in the fund?

Accepted Answer

A) 43,000,000 
B) 6,488,372 
C) 5,601,709 
D) 1,182,203 
E) None of the above. 
A) 43,000,000 
B) 6,488,372 
C) 5,601,709 
D) 1,182,203 
E) None of the above.

Question 19

A mutual fund had NAV per share of $26.25 on January 1,2009.On December 31 of the same year the fund's rate of return for the year was 16.4%.Income distributions were $1.27 and the fund had capital gain distributions of $1.85.Without considering taxes and transactions costs,what ending NAV would you calculate?

Accepted Answer

A) $27.44 
B) $33.88 
C) $24.69 
D) $42.03 
E) $16.62 
A) $27.44 
B) $33.88 
C) $24.69 
D) $42.03 
E) $16.62

Question 20

Pinnacle Fund had year-end assets of $825,000,000 and liabilities of $25,000,000.If Pinnacle's NAV was $32.18,how many shares must have been held in the fund?

Accepted Answer

A) 21,619,346.92 
B) 22,930,546.28 
C) 24,860,161.59 
D) 25,693,645.25 
E) None of the above. 
A) 21,619,346.92 
B) 22,930,546.28 
C) 24,860,161.59 
D) 25,693,645.25 
E) None of the above.

Exam 4: Mutual Funds and Other Investment Companies

Of the following types of ETFs,an investor that wishes to invest in a diversified portfolio that tracks the Nasdaq 100 should choose

In 2009 the proportion of mutual funds (based on total assets)specializing in money market securities was

Investors in closed-end funds who wish to liquidate their positions must

A mutual fund had average daily assets of $4.0 billion in 2009.The fund sold $1.5 billion worth of stock and purchased $1.6 billion worth of stock during the year.The fund's turnover ratio is ____________.

Multiple Mutual Funds had year-end assets of $457,000,000 and liabilities of $17,000,000.There were 24,300,000 shares in the fund at year-end.What was Multiple Mutual's Net Asset Value?

Most actively managed mutual funds,when compared to a market index such as the Wilshire 5000,

A mutual fund had average daily assets of $2.0 billion in 2009.The fund sold $500 million worth of stock and purchased $600 million worth of stock during the year.The fund's turnover ratio is ___.

Growth Fund had year-end assets of $862,000,000 and liabilities of $12,000,000.There were 32,675,254 shares in the fund at year-end.What was Growth Fund's Net Asset Value?

Which of the following is true regarding equity mutual funds? I.They invest primarily in stock. II.They may hold fixed-income securities as well as stock. III.Most hold money market securities as well as stock. IV.Two types of equity funds are income funds and growth funds.

Which of the following would increase the net asset value of a mutual fund share,assuming all other things remain unchanged?

Which of the following functions do investment companies perform for their investors?

Which of the following characteristics apply to unit investment trusts? I.Most are invested in fixed-income portfolios. II.They are actively managed portfolios. III.The sponsor pools securities,then sells public shares in the trust. IV.The portfolio is fixed for the life of the fund.

In 2009 the proportion of hybrid (bond and stock)mutual funds (based on total assets)was

Management fees and other expenses of mutual funds may include

Of the following types of ETFs,an investor that wishes to invest in a diversified portfolio that tracks the S&P 500 should choose

Diversified Portfolios had year-end assets of $279,000,000 and liabilities of $43,000,000.If Diversified's NAV was $42.13,how many shares must have been held in the fund?

Pinnacle Fund had year-end assets of $825,000,000 and liabilities of $25,000,000.If Pinnacle's NAV was $32.18,how many shares must have been held in the fund?

The Investment Environment

Asset Classes and Financial Instruments

How Securities are Traded

Introduction to Risk,return,and the Historical Record

Risk Aversion and Capital Allocation to Risky Assets

Optimal Risky Portfolios

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, swaps, and Risk Management

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the CFA Institute Appendices

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