Question 1

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. 
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.

Question 2

A mutual fund had NAV per share of $23.00 on January 1, 2016. On December 31 of the same year, the fund's NAV was $23.15. Income distributions were $0.63, and the fund had capital gain distributions of $1.26. Without considering taxes and transactions costs, what rate of return did an investor receive on the fund last year?

Accepted Answer

A)  11.26% 
B)  10.54% 
C)  8.87% 
D)  8.26% 
E)  9.63% 
A)  11.26% 
B)  10.54% 
C)  8.87% 
D)  8.26% 
E)  9.63%

Question 3

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the MSCI Japan Index should choose

Accepted Answer

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

Question 4

In 2016, the proportion of mutual funds (based on total assets) specializing in bonds was

Accepted Answer

A)  21.8%. 
B)  28.0%. 
C)  54.1%. 
D)  73.4%. 
E)  63.5%. 
A)  21.8%. 
B)  28.0%. 
C)  54.1%. 
D)  73.4%. 
E)  63.5%.

Question 5

Differences between hedge funds and mutual funds are that

Accepted Answer

A)  hedge funds are only subject to minimal SEC regulation. 
B)  hedge funds are typically open only to wealthy or institutional investors. 
C)  hedge fund managers can pursue strategies not available to mutual funds, such as short selling, heavy use of derivatives, and leverage. 
D)  hedge funds are commonly structured as private partnerships. 
E)  All of the options. 
A)  hedge funds are only subject to minimal SEC regulation. 
B)  hedge funds are typically open only to wealthy or institutional investors. 
C)  hedge fund managers can pursue strategies not available to mutual funds, such as short selling, heavy use of derivatives, and leverage. 
D)  hedge funds are commonly structured as private partnerships. 
E)  All of the options.

Question 6

A mutual fund had NAV per share of $19.00 on January 1, 2016. On December 31 of the same year, the fund's NAV was $19.14. Income distributions were $0.57, and the fund had capital gain distributions of $1.12. Without considering taxes and transactions costs, what rate of return did an investor receive on the fund last year?

Accepted Answer

A)  11.26% 
B)  10.54% 
C)  7.97% 
D)  8.26% 
E)  9.63% 
A)  11.26% 
B)  10.54% 
C)  7.97% 
D)  8.26% 
E)  9.63%

Question 7

A mutual fund had year-end assets of $521,000,000 and liabilities of $63,000,000. If the fund NAV was $26.12, how many shares must have been held in the fund?

Accepted Answer

A)  17,534,456 
B)  16,488,372 
C)  18,601,742 
D)  17,542,515 
A)  17,534,456 
B)  16,488,372 
C)  18,601,742 
D)  17,542,515

Question 8

The Profitability Fund had NAV per share of $17.50 on January 1, 2016. On December 31 of the same year, the fund's NAV was $19.47. Income distributions were $0.75, and the fund had capital gain distributions of $1.00. Without considering taxes and transactions costs, what rate of return did an investor receive on the Profitability Fund last year?

Accepted Answer

A)  11.26% 
B)  15.54% 
C)  16.97% 
D)  21.26% 
E)  9.83% 
A)  11.26% 
B)  15.54% 
C)  16.97% 
D)  21.26% 
E)  9.83%

Question 9

A mutual fund had NAV per share of $16.75 on January 1, 2016. On December 31 of the same year, the fund's rate of return for the year was 26.6%. Income distributions were $1.79, and the fund had capital gain distributions of $2.80. Without considering taxes and transactions costs, what ending NAV would you calculate?

Accepted Answer

A)  $17.44 
B)  $13.28 
C)  $14.96 
D)  $17.25 
E)  $16.62 
A)  $17.44 
B)  $13.28 
C)  $14.96 
D)  $17.25 
E)  $16.62

Question 10

Commingled funds are

Accepted Answer

A)  amounts invested in equity and fixed-income mutual funds. 
B)  funds that may be purchased at intervals of 3, 6, or 12 months at the discretion of management. 
C)  amounts invested in domestic and global equities. 
D)  closed-end funds that may be repurchased only once every two years at the discretion of mutual fund management. 
E)  partnerships of investors that pool their funds, which are then managed for a fee. 
A)  amounts invested in equity and fixed-income mutual funds. 
B)  funds that may be purchased at intervals of 3, 6, or 12 months at the discretion of management. 
C)  amounts invested in domestic and global equities. 
D)  closed-end funds that may be repurchased only once every two years at the discretion of mutual fund management. 
E)  partnerships of investors that pool their funds, which are then managed for a fee.

Question 11

A mutual fund had NAV per share of $23.00 on January 1, 2016. On December 31 of the same year, the fund's NAV was $23.15. Income distributions were $0.63, and the fund had capital gain distributions of $1.26. Without considering taxes and transactions costs, what rate of return did an investor receive on the fund last year?

Accepted Answer

A)  11.26% 
B)  10.54% 
C)  8.87% 
D)  8.26% 
E)  9.63% 
A)  11.26% 
B)  10.54% 
C)  8.87% 
D)  8.26% 
E)  9.63%

Question 12

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. 
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.

Question 13

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 14

Assume that you purchased 200 shares of Super Performing mutual fund at a net asset value of $21 per share. During the year, you received dividend income distributions of $1.50 per share and capital gains distributions of $2.85 per share. At the end of the year, the shares had a net asset value of $23 per share. What was your rate of return on this investment?

Accepted Answer

A)  30.24% 
B)  25.37% 
C)  27.19% 
D)  22.44% 
E)  29.18% 
A)  30.24% 
B)  25.37% 
C)  27.19% 
D)  22.44% 
E)  29.18%

Question 15

Assume that you purchased shares of a mutual fund at a net asset value of $10.00 per share. During the year, you received dividend income distributions of $0.05 per share and capital gains distributions of $0.06 per share. At the end of the year, the shares had a net asset value of $8.16 per share. What was your rate of return on this investment?

Accepted Answer

A)  -18.24% 
B)  -16.1% 
C)  16.10% 
D)  -17.3% 
E)  17.3% 
A)  -18.24% 
B)  -16.1% 
C)  16.10% 
D)  -17.3% 
E)  17.3%

Question 16

A mutual fund had average daily assets of $2.0 billion in 2016. 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 17

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the MSCI France Index should choose

Accepted Answer

A)  SPY. 
B)  EWJ. 
C)  EWQ. 
D)  IWM. 
E)  VTI. 
A)  SPY. 
B)  EWJ. 
C)  EWQ. 
D)  IWM. 
E)  VTI.

Question 18

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

Question 19

In 2016, 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)  17.6%. 
A)  21.7%. 
B)  28.0%. 
C)  54.1%. 
D)  73.4%. 
E)  17.6%.

Question 20

A mutual fund had year-end assets of $750,000,000 and liabilities of $7,500,000. There were 40,000,000 shares in the fund at year end. What was the mutual fund's net asset value?

Accepted Answer

A)  $9.63 
B)  $18.56 
C)  $16.42 
D)  $17.87 
E)  $17.26 
A)  $9.63 
B)  $18.56 
C)  $16.42 
D)  $17.87 
E)  $17.26

Exam 4: Mutual Funds and Other Investment Companies

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

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the MSCI Japan Index should choose

In 2016, the proportion of mutual funds (based on total assets) specializing in bonds was

Differences between hedge funds and mutual funds are that

A mutual fund had year-end assets of $521,000,000 and liabilities of $63,000,000. If the fund NAV was $26.12, how many shares must have been held in the fund?

Commingled funds are

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

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.

A mutual fund had average daily assets of $2.0 billion in 2016. The fund sold $500 million worth of stock and purchased $600 million worth of stock during the year. The fund's turnover ratio is

Of the following types of ETFs, an investor who wishes to invest in a diversified portfolio that tracks the MSCI France Index should choose

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

In 2016, the proportion of mutual funds (based on total assets) specializing in money market securities was

A mutual fund had year-end assets of $750,000,000 and liabilities of $7,500,000. There were 40,000,000 shares in the fund at year end. What was the mutual fund's net asset value?

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Risk, Return, and the Historical Record

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

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

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