Question 1

Which type of investment fund is commonly known to invest in options and futures in large scale?

Accepted Answer

A)  Commingled funds 
B)  Hedge funds 
C)  ETFs 
D)  REITS 
A)  Commingled funds 
B)  Hedge funds 
C)  ETFs 
D)  REITS B

Question 2

Which of the following typically employ significant amounts of leverage?
I.Hedge funds
II.REITs
III.Money market funds
IV.Equity mutual funds

Accepted Answer

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

Question 3

A fund that invests in securities worldwide,including the United States is called a/an ______.

Accepted Answer

A)  international fund 
B)  emerging market fund 
C)  global fund 
D)  regional fund 
A)  international fund 
B)  emerging market fund 
C)  global fund 
D)  regional fund C

Question 4

Investors who wish to liquidate their holdings in a closed-end fund may ___________________.

Accepted Answer

A)  sell their shares back to the fund at a discount if they wish 
B)  sell their shares back to the fund at net asset value 
C)  sell their shares on the open market 
D)  sell their shares at a premium to net asset value if they wish 
A)  sell their shares back to the fund at a discount if they wish 
B)  sell their shares back to the fund at net asset value 
C)  sell their shares on the open market 
D)  sell their shares at a premium to net asset value if they wish

Question 5

The ratio of trading activity of a portfolio to the assets of the portfolio,is called ____________.

Accepted Answer

A)  the reinvestment ratio 
B)  the trading rate 
C)  the portfolio turnover 
D)  the tax yield 
A)  the reinvestment ratio 
B)  the trading rate 
C)  the portfolio turnover 
D)  the tax yield

Question 6

Which of the following is not a type of managed investment company?

Accepted Answer

A)  Unit investment trusts 
B)  Closed-end funds 
C)  Open-end funds 
D)  Hedge funds 
A)  Unit investment trusts 
B)  Closed-end funds 
C)  Open-end funds 
D)  Hedge funds

Question 7

__________ is a false statement regarding open-end mutual funds.

Accepted Answer

A)  They offer investors a guaranteed rate of return 
B)  They offer investors a well diversified portfolio 
C)  They redeem shares at their net asset value 
D)  They offer low cost diversification 
A)  They offer investors a guaranteed rate of return 
B)  They offer investors a well diversified portfolio 
C)  They redeem shares at their net asset value 
D)  They offer low cost diversification

Question 8

The Stone Harbor Fund is a closed-end investment company with a portfolio currently worth $300 million.It has liabilities of $5 million and 9 million shares outstanding.If the fund sells for $30 a share,what is its premium or discount as a percent of NAV?

Accepted Answer

A)  9.26% premium 
B)  8.47% premium 
C)  9.26% discount 
D)  8.47% discount 
A)  9.26% premium 
B)  8.47% premium 
C)  9.26% discount 
D)  8.47% discount

Question 9

Under SEC rules,the managers of certain funds are allowed to deduct charges for advertising,brokerage commissions,and other sales expenses,directly from the fund assets rather than billing investors.These fees are known as ____________.

Accepted Answer

A)  direct operating expenses 
B)  back-end loads 
C)  12b-1 charges 
D)  front-end loads 
A)  direct operating expenses 
B)  back-end loads 
C)  12b-1 charges 
D)  front-end loads

Question 10

You invest in a mutual fund that charges a 3% front end load,1% total annual fees,and a 2% back end load,which decreases 0.5% per year.How much will you pay in fees on a $10,000 investment that does not grow,if you cash out after three years of no gain?

Accepted Answer

A)  103 
B)  219 
C)  553 
D)  635 
A)  103 
B)  219 
C)  553 
D)  635

Question 11

Investors who wish to liquidate their holdings in a unit investment trust may ___________________.

Accepted Answer

A)  sell their shares back to the trustee at a discount 
B)  sell their shares back to the trustee at net asset value 
C)  sell their shares on the open market 
D)  sell their shares at a premium to net asset value 
A)  sell their shares back to the trustee at a discount 
B)  sell their shares back to the trustee at net asset value 
C)  sell their shares on the open market 
D)  sell their shares at a premium to net asset value

Question 12

The two principal types of REITs are equity trusts which _______________ and mortgage trusts which _______________.

Accepted Answer

A)  invest directly in real estate; invest in mortgage and construction loans 
B)  invest in mortgage and construction loans; invest directly in real estate 
C)  use extensive leverage; distribute less than 95% of income to shareholders 
D)  distribute less than 95% of income to shareholders; use extensive leverage 
A)  invest directly in real estate; invest in mortgage and construction loans 
B)  invest in mortgage and construction loans; invest directly in real estate 
C)  use extensive leverage; distribute less than 95% of income to shareholders 
D)  distribute less than 95% of income to shareholders; use extensive leverage

Question 13

__________ fund is defined as one where the fund charges a sales commission to either buy into or exit the fund.

Accepted Answer

A)  A load 
B)  A no-load 
C)  An index 
D)  A specialized sector fund 
A)  A load 
B)  A no-load 
C)  An index 
D)  A specialized sector fund

Question 14

The primary measurement unit used for assessing the value of one's stake in an investment company is ___________________.

Accepted Answer

A)  Net Asset Value 
B)  Average Asset Value 
C)  Gross Asset Value 
D)  Total Asset Value 
A)  Net Asset Value 
B)  Average Asset Value 
C)  Gross Asset Value 
D)  Total Asset Value

Question 15

The NAV of which funds is fixed at $1 per share?

Accepted Answer

A)  Equity funds 
B)  Money market funds 
C)  Fixed income funds 
D)  Commingled funds 
A)  Equity funds 
B)  Money market funds 
C)  Fixed income funds 
D)  Commingled funds

Question 16

Advantages of ETFs over mutual funds include all but which one of the following?

Accepted Answer

A)  ETFs trade continuously so investors can trade throughout the day 
B)  ETFs can be sold short or purchased on margin, unlike fund shares 
C)  ETF providers do not have to sell holdings to fund redemptions 
D)  ETF values can diverge from NAV 
A)  ETFs trade continuously so investors can trade throughout the day 
B)  ETFs can be sold short or purchased on margin, unlike fund shares 
C)  ETF providers do not have to sell holdings to fund redemptions 
D)  ETF values can diverge from NAV

Question 17

About _________ of mutual fund assets are invested in no-load funds.

Accepted Answer

A)  33% 
B)  40% 
C)  50% 
D)  65% 
A)  33% 
B)  40% 
C)  50% 
D)  65%

Question 18

Low load mutual funds have front-end loads of no more than _____.

Accepted Answer

A)  2% 
B)  3% 
C)  4% 
D)  5% 
A)  2% 
B)  3% 
C)  4% 
D)  5%

Question 19

Advantages of investment companies to investors include all but which one of the following?

Accepted Answer

A)  Record keeping and administration 
B)  Low cost diversification 
C)  Professional management 
D)  Guaranteed rates of return 
A)  Record keeping and administration 
B)  Low cost diversification 
C)  Professional management 
D)  Guaranteed rates of return

Question 20

A contingent deferred sales charge is commonly called a ____.

Accepted Answer

A)  front-end load 
B)  back-end load 
C)  12b-1 charge 
D)  top end sales commission 
A)  front-end load 
B)  back-end load 
C)  12b-1 charge 
D)  top end sales commission

Exam 4: Mutual Funds and Other Investment Companies

Which type of investment fund is commonly known to invest in options and futures in large scale?

Which of the following typically employ significant amounts of leverage? I.Hedge funds II.REITs III.Money market funds IV.Equity mutual funds

A fund that invests in securities worldwide,including the United States is called a/an ______.

Investors who wish to liquidate their holdings in a closed-end fund may ___________________.

The ratio of trading activity of a portfolio to the assets of the portfolio,is called ____________.

Which of the following is not a type of managed investment company?

__________ is a false statement regarding open-end mutual funds.

The Stone Harbor Fund is a closed-end investment company with a portfolio currently worth $300 million.It has liabilities of $5 million and 9 million shares outstanding.If the fund sells for $30 a share,what is its premium or discount as a percent of NAV?

Under SEC rules,the managers of certain funds are allowed to deduct charges for advertising,brokerage commissions,and other sales expenses,directly from the fund assets rather than billing investors.These fees are known as ____________.

You invest in a mutual fund that charges a 3% front end load,1% total annual fees,and a 2% back end load,which decreases 0.5% per year.How much will you pay in fees on a $10,000 investment that does not grow,if you cash out after three years of no gain?

Investors who wish to liquidate their holdings in a unit investment trust may ___________________.

The two principal types of REITs are equity trusts which _______________ and mortgage trusts which _______________.

__________ fund is defined as one where the fund charges a sales commission to either buy into or exit the fund.

The primary measurement unit used for assessing the value of one's stake in an investment company is ___________________.

The NAV of which funds is fixed at $1 per share?

Advantages of ETFs over mutual funds include all but which one of the following?

About _________ of mutual fund assets are invested in no-load funds.

Low load mutual funds have front-end loads of no more than _____.

Advantages of investment companies to investors include all but which one of the following?

A contingent deferred sales charge is commonly called a ____.

Investments: Background and Issues

Asset Classes and Financial Instruments

Securities Markets

Risk and Return: Past and Prologue

Efficient Diversification

Capital Asset Pricing and Arbitrage Pricing Theory

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Bond Prices and Yields

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation

Financial Statement Analysis

Options Markets

Option Valuation

Futures Markets and Risk Management

Portfolio Performance Evaluation

Globalization and International Investing

Hedge Funds

Taxes,inflation,and Investment Strategy

Investors and the Investment Process

Filters

The two principal types of REITs are equity trusts which _ and mortgage trusts which _.