Question 1

All classes of mutual fund shares may legally charge an annual 12b-1 fee.

Accepted Answer

A) True 
 B)False  True

Question 2

An open-ended fund has stocks of three companies: 200 shares of IBM currently valued at $50.00,100 shares of GE currently values at $20 and 100 shares of Digital currently valued at $30.The fund has 500 shares outstanding.What is the net asset value (NAV)of the fund?

Accepted Answer

A) $30.00. 
B) $60.00. 
C) $120.00. 
D) $12.00. 
A) $30.00. 
B) $60.00. 
C) $120.00. 
D) $12.00. A

Question 3

Duties of a mutual fund chief compliance officer include

Accepted Answer

A) policing the trading by non-fund managers. 
B) ensuring the accuracy of information provided to fund managers. 
C) reviewing fund business practices such as marketing and administration. 
D) reporting any wrongdoing directly to fund directors. 
A) policing the trading by non-fund managers. 
B) ensuring the accuracy of information provided to fund managers. 
C) reviewing fund business practices such as marketing and administration. 
D) reporting any wrongdoing directly to fund directors. D

Question 4

Benefits of investing in an exchange traded fund (ETFI)rather than an open-ended,no-load index mutual fund include all of the following EXCEPT.

Accepted Answer

A) ability to buy or sell anytime during the trading day 
B) lower management fees 
C) ability to purchase on margin 
D) income tax-exempt status for capital gains 
A) ability to buy or sell anytime during the trading day 
B) lower management fees 
C) ability to purchase on margin 
D) income tax-exempt status for capital gains

Question 5

In 1998,the SEC required that portions of mutual fund prospectuses must be written in easily understood "plain" English.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the primary regulator (s)of mutual funds?

Accepted Answer

A) Federal Reserve. 
B) SEC. 
C) NASD. 
D) State regulators. 
A) Federal Reserve. 
B) SEC. 
C) NASD. 
D) State regulators.

Question 7

Open-end mutual funds guarantee

Accepted Answer

A) investors a minimum rate of return. 
B) investors a minimum Net Asset Value (NAV). 
C) to redeem investors' shares upon demand at the daily Net Asset Value (NAV). 
D) to earn the rate of return promised in the prospectus. 
A) investors a minimum rate of return. 
B) investors a minimum Net Asset Value (NAV). 
C) to redeem investors' shares upon demand at the daily Net Asset Value (NAV). 
D) to earn the rate of return promised in the prospectus.

Question 8

The Securities Exchange Act of 1934 requires a mutual fund to file a registration statement with the SEC.

Accepted Answer

A) True 
 B)False

Question 9

Fees investors are charged to cover administration and shareholder services are called

Accepted Answer

A) 12b-1 fees. 
B) management fees. 
C) sales loads. 
D) preemptive taxes. 
A) 12b-1 fees. 
B) management fees. 
C) sales loads. 
D) preemptive taxes.

Question 10

The first mutual fund was founded in this city in 1924.

Accepted Answer

A) New York,New York 
B) San Francisco,California 
C) Boston,Massachusetts 
D) London,England 
A) New York,New York 
B) San Francisco,California 
C) Boston,Massachusetts 
D) London,England

Question 11

The SEC requires mutual funds to disclose the risk to investors of frequent trading in fund shares.

Accepted Answer

A) True 
 B)False

Question 12

As a result of illegal and abusive activities in recent years,new rules and regulations were imposed on mutual fund companies in 2004.These rules were intended to

Accepted Answer

A) close legal loopholes that some fund managers had abused. 
B) improve fund governance. 
C) give investors more information about conflicts of interest. 
D) ensure the accuracy of information given to regulators. 
E) All of the options. 
A) close legal loopholes that some fund managers had abused. 
B) improve fund governance. 
C) give investors more information about conflicts of interest. 
D) ensure the accuracy of information given to regulators. 
E) All of the options.

Question 13

Which of the following is common to both hedge funds and mutual funds?

Accepted Answer

A) SEC Registration. 
B) Disclosure rules. 
C) Management fees. 
D) Performance fees. 
A) SEC Registration. 
B) Disclosure rules. 
C) Management fees. 
D) Performance fees.

Question 14

The chief compliance officer of a mutual fund reports directly to the senior executives of the fund management company.

Accepted Answer

A) True 
 B)False

Question 15

Eveningstar open-end fund has 1,000 shares outstanding and has the following assets in its portfolio: 100 shares of Procter & Gamble (P&G)priced at $30.00,300 shares of Intel priced at $50.00 and 200 shares of Microsoft priced at $60.00.The Morningstar closed-end fund has the following stocks in its portfolio: 300 shares of P&G and 300 shares of Microsoft.It has a total of 500 shares outstanding. 
-If the price of P&G shares rises to $35 and the price of Microsoft falls to $40.00,what is the new NAV of both funds?

Accepted Answer

A) $26.50 and $45.00. 
B) $13.25 and $13.00. 
C) $39.75 and $22.50. 
D) $53.00 and $45.00. 
A) $26.50 and $45.00. 
B) $13.25 and $13.00. 
C) $39.75 and $22.50. 
D) $53.00 and $45.00.

Question 16

Match the following pieces of legislation with the function achieved by each regulation as stated in the question.
-Requires a mutual fund to furnish full and accurate information on all financial and corporate matters to prospective fund purchasers.

Accepted Answer

A) Securities Act of 1933 
B) Securities Exchange Act of 1934 
C) Investment Advisers Act of 1940 
D) Investment Company Act of 1940 
E) Insider Trading and Securities Fraud Enforcement Act of 1988
F)Market Reform Act of 1990
G)National Securities Markets Improvement Act of 1996 
A) Securities Act of 1933 
B) Securities Exchange Act of 1934 
C) Investment Advisers Act of 1940 
D) Investment Company Act of 1940 
E) Insider Trading and Securities Fraud Enforcement Act of 1988
F)Market Reform Act of 1990
G)National Securities Markets Improvement Act of 1996

Question 17

Exchange traded funds (ETFs)are registered as investment companies with the Securities Exchange Commission (SEC).

Accepted Answer

A) True 
 B)False

Question 18

The process used to determine the value of mutual fund shares each per day is known as

Accepted Answer

A) Directed brokerage. 
B) Marking-to-market. 
C) Late trading. 
D) Market timing. 
A) Directed brokerage. 
B) Marking-to-market. 
C) Late trading. 
D) Market timing.

Question 19

The largest proportion of assets of money market mutual funds in 2015 was

Accepted Answer

A) security repos. 
B) time and savings deposits. 
C) checkable deposits and currency. 
D) credit market instruments. 
A) security repos. 
B) time and savings deposits. 
C) checkable deposits and currency. 
D) credit market instruments.

Question 20

Match the following pieces of legislation with the function achieved by each regulation as stated in the question.
-Allows the SEC to introduce circuit breakers to halt trading on exchanges.

Accepted Answer

A) Securities Act of 1933 
B) Securities Exchange Act of 1934 
C) Investment Advisers Act of 1940 
D) Investment Company Act of 1940 
E) Insider Trading and Securities Fraud Enforcement Act of 1988
F)Market Reform Act of 1990
G)National Securities Markets Improvement Act of 1996 
A) Securities Act of 1933 
B) Securities Exchange Act of 1934 
C) Investment Advisers Act of 1940 
D) Investment Company Act of 1940 
E) Insider Trading and Securities Fraud Enforcement Act of 1988
F)Market Reform Act of 1990
G)National Securities Markets Improvement Act of 1996

Exam 5: Financial Services: Mutual Fund and Hedge Fund Companies

All classes of mutual fund shares may legally charge an annual 12b-1 fee.

An open-ended fund has stocks of three companies: 200 shares of IBM currently valued at $50.00,100 shares of GE currently values at $20 and 100 shares of Digital currently valued at $30.The fund has 500 shares outstanding.What is the net asset value (NAV)of the fund?

Duties of a mutual fund chief compliance officer include

Benefits of investing in an exchange traded fund (ETFI)rather than an open-ended,no-load index mutual fund include all of the following EXCEPT.

In 1998,the SEC required that portions of mutual fund prospectuses must be written in easily understood "plain" English.

Which of the following is the primary regulator (s)of mutual funds?

Open-end mutual funds guarantee

The Securities Exchange Act of 1934 requires a mutual fund to file a registration statement with the SEC.

Fees investors are charged to cover administration and shareholder services are called

The first mutual fund was founded in this city in 1924.

The SEC requires mutual funds to disclose the risk to investors of frequent trading in fund shares.

As a result of illegal and abusive activities in recent years,new rules and regulations were imposed on mutual fund companies in 2004.These rules were intended to

Which of the following is common to both hedge funds and mutual funds?

The chief compliance officer of a mutual fund reports directly to the senior executives of the fund management company.

Match the following pieces of legislation with the function achieved by each regulation as stated in the question. -Requires a mutual fund to furnish full and accurate information on all financial and corporate matters to prospective fund purchasers.

Exchange traded funds (ETFs)are registered as investment companies with the Securities Exchange Commission (SEC).

The process used to determine the value of mutual fund shares each per day is known as

The largest proportion of assets of money market mutual funds in 2015 was

Match the following pieces of legislation with the function achieved by each regulation as stated in the question. -Allows the SEC to introduce circuit breakers to halt trading on exchanges.

Why Are Financial Institutions Special

Financial Services: Depository Institutions

Financial Services: Finance Companies

Financial Services: Securities Firms and Investment Banks

Financial Services: Insurance Companies

Risks of Financial Institutions

Interest Rate Risk I

Interest Rate Risk II

Credit Risk: Individual Loan Risk

Credit Risk: Loan Portfolio and Concentration Risk

Liquidity Risk

Foreign Exchange Risk

Sovereign Risk

Market Risk

Off-Balance-Sheet Risk

Technology and Other Operational Risks

Liability and Liquidity Management

Deposit Insurance and Other Liability Guarantees

Capital Adequacy

Product and Geographic Expansion

Futures and Forwards

Options, Caps, Floors, and Collars

Swaps

Loan Sales

Securitization

Filters