Question 1

Measured by assets,about _____ of funds are money market funds.

Accepted Answer

A)  15% 
B)  25% 
C)  40% 
D)  60% 
A)  15% 
B)  25% 
C)  40% 
D)  60%

Question 2

Mutual funds account for roughly ______ percent of investment company assets.

Accepted Answer

A)  30 
B)  50 
C)  70 
D)  90 
A)  30 
B)  50 
C)  70 
D)  90

Question 3

You pay $21,600 to the Laramie Fund which has a NAV of $18.00 per share at the beginning of the year.The fund deducted a front-end load of 4%.The securities in the fund increased in value by 10% during the year.The fund's expense ratio is 1.3% and is deducted from year end asset values.What is your rate of return on the fund if you sell your shares at the end of the year?

Accepted Answer

A)  4.35% 
B)  4.23% 
C)  6.45% 
D)  5.63% 
A)  4.35% 
B)  4.23% 
C)  6.45% 
D)  5.63%

Question 4

The assets of a mutual fund are $25 million.The liabilities are $4 million.If the fund has 700,000 shares outstanding and pays a $3 dividend,what is the dividend yield?

Accepted Answer

A)  5% 
B)  10% 
C)  15% 
D)  20% 
A)  5% 
B)  10% 
C)  15% 
D)  20%

Question 5

Consider a no-load mutual fund with $400 million in assets,50 million in debt,and 15 million shares at the start of the year; and $500 million in assets,40 million in debt,and 18 million shares at the end of the year.During the year investors have received income distributions of $0.50 per share,and capital gains distributions of $0.30 per share.Assuming that the fund carries no debt,and that the total expense ratio is 0.75%,what is the rate of return on the fund?

Accepted Answer

A)  12.09% 
B)  12.99% 
C)  8.25% 
D)  There is not sufficient information to answer this question 
A)  12.09% 
B)  12.99% 
C)  8.25% 
D)  There is not sufficient information to answer this question

Question 6

Which of the following funds are usually most tax efficient?

Accepted Answer

A)  Equity funds 
B)  Bond Funds 
C)  ETFs 
D)  Specialized sector funds 
A)  Equity funds 
B)  Bond Funds 
C)  ETFs 
D)  Specialized sector funds

Question 7

The Vanguard 500 Index Fund tracks the performance of the S&P 500.To do so the fund buys shares in each S&P 500 company __________.

Accepted Answer

A)  in proportion to the market value weight of the firm's equity in the S&P500 
B)  in proportion to the price weight of the stock in the S&P500 
C)  by purchasing an equal number of shares of each stock in the S&P 500 
D)  by purchasing an equal dollar amount of shares of each stock in the S&P500 
A)  in proportion to the market value weight of the firm's equity in the S&P500 
B)  in proportion to the price weight of the stock in the S&P500 
C)  by purchasing an equal number of shares of each stock in the S&P 500 
D)  by purchasing an equal dollar amount of shares of each stock in the S&P500

Question 8

With respect to mutual funds,late trading refers to the practice of ________.

Accepted Answer

A)  trading after the close of U.S. markets but before overseas markets have closed 
B)  trading after the close of overseas markets, but before U.S. markets have closed 
C)  accepting buy or sell orders after the market closes and NAV has already been determined for the day 
D)  paying capital gains distributions to certain investors only after paying privileged investors first 
A)  trading after the close of U.S. markets but before overseas markets have closed 
B)  trading after the close of overseas markets, but before U.S. markets have closed 
C)  accepting buy or sell orders after the market closes and NAV has already been determined for the day 
D)  paying capital gains distributions to certain investors only after paying privileged investors first

Question 9

An open-end fund has a NAV of $16.50 per share.The fund charges a 6% load.What is the offering price?

Accepted Answer

A)  $14.57 
B)  $15.95 
C)  $17.55 
D)  $16.49 
A)  $14.57 
B)  $15.95 
C)  $17.55 
D)  $16.49

Question 10

Mutual funds provide the following for their shareholders:

Accepted Answer

A)  Diversification 
B)  Professional management 
C)  Record keeping and administration 
D)  Mutual funds provide diversification, professional management, and record keeping and administration 
A)  Diversification 
B)  Professional management 
C)  Record keeping and administration 
D)  Mutual funds provide diversification, professional management, and record keeping and administration

Question 11

Mutual fund returns may be granted pass-through status,if _________________.

Accepted Answer

A)  at least 90 percent of all income is distributed to shareholders 
B)  at least 30 percent of fund income is derived from sale of securities held for less than 3 months 
C)  certain diversification criteria are met 
D)  All of these must be true for pass-through status to be granted 
A)  at least 90 percent of all income is distributed to shareholders 
B)  at least 30 percent of fund income is derived from sale of securities held for less than 3 months 
C)  certain diversification criteria are met 
D)  All of these must be true for pass-through status to be granted

Question 12

Which of the following ETFs tracks the S&P 500 index?

Accepted Answer

A)  Qubes 
B)  Diamonds 
C)  Vipers 
D)  Spiders 
A)  Qubes 
B)  Diamonds 
C)  Vipers 
D)  Spiders

Question 13

You invest in a mutual fund that charges a 3% front end load,1% total annual fees,and a 0% back end load on Class A shares.The same fund charges 0% front end load,1% total annual fees,and a 2% back end load on Class B shares.What are the total fees in year one on a Class B investment of $20,000 if you redeem shares with no growth in value?

Accepted Answer

A)  596 
B)  794 
C)  885 
D)  902 
A)  596 
B)  794 
C)  885 
D)  902

Question 14

Which of the following result in a taxable event for investors?
I.Short-term capital gains distributions from the fund
II.Dividend distributions from the fund
III.Long-term capital gains distributions from the fund

Accepted Answer

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

Question 15

A/an _____ is an example of an exchange-traded fund.

Accepted Answer

A)  SPDR or spider 
B)  samurai 
C)  Vanguard 
D)  open-end fund 
A)  SPDR or spider 
B)  samurai 
C)  Vanguard 
D)  open-end fund

Question 16

In the U.S.there are approximately _______ mutual funds offered by less than _______ fund families.

Accepted Answer

A)  12,000; 600 
B)  7,000; 100 
C)  8,000; 500 
D)  9,000; 300 
A)  12,000; 600 
B)  7,000; 100 
C)  8,000; 500 
D)  9,000; 300

Question 17

In 1999,the SEC established rules that should make a mutual fund prospectus _______.

Accepted Answer

A)  easier to read and understand 
B)  much more detailed 
C)  disappear over the next 10 years 
D)  irrelevant to investors 
A)  easier to read and understand 
B)  much more detailed 
C)  disappear over the next 10 years 
D)  irrelevant to investors

Question 18

__________ funds stand ready to redeem or issue shares at their net asset value.

Accepted Answer

A)  Closed-end 
B)  Index 
C)  Open-end 
D)  Hedge 
A)  Closed-end 
B)  Index 
C)  Open-end 
D)  Hedge

Question 19

SEC rule 12b-1 allows managers of certain funds to deduct __________ expenses from fund assets,however,these expenses may not exceed __________ of the fund's average net assets per year.

Accepted Answer

A)  marketing; 1% 
B)  marketing; 5% 
C)  administrative; 0.5% 
D)  administrative; 2% 
A)  marketing; 1% 
B)  marketing; 5% 
C)  administrative; 0.5% 
D)  administrative; 2%

Question 20

Sponsors of unit investment trusts earn a profit by ___________________.

Accepted Answer

A)  deducting management fees from fund assets 
B)  deducting a percentage of any gains in asset value 
C)  selling shares in the trust at a premium to the cost of acquiring the underlying assets 
D)  charging portfolio turnover fees 
A)  deducting management fees from fund assets 
B)  deducting a percentage of any gains in asset value 
C)  selling shares in the trust at a premium to the cost of acquiring the underlying assets 
D)  charging portfolio turnover fees

Measured by assets,about _____ of funds are money market funds.

Mutual funds account for roughly ______ percent of investment company assets.

The assets of a mutual fund are $25 million.The liabilities are $4 million.If the fund has 700,000 shares outstanding and pays a $3 dividend,what is the dividend yield?

Which of the following funds are usually most tax efficient?

The Vanguard 500 Index Fund tracks the performance of the S&P 500.To do so the fund buys shares in each S&P 500 company __________.

With respect to mutual funds,late trading refers to the practice of ________.

An open-end fund has a NAV of $16.50 per share.The fund charges a 6% load.What is the offering price?

Mutual funds provide the following for their shareholders:

Mutual fund returns may be granted pass-through status,if _________________.

Which of the following ETFs tracks the S&P 500 index?

Which of the following result in a taxable event for investors? I.Short-term capital gains distributions from the fund II.Dividend distributions from the fund III.Long-term capital gains distributions from the fund

A/an _____ is an example of an exchange-traded fund.

In the U.S.there are approximately _ mutual funds offered by less than _ fund families.

In 1999,the SEC established rules that should make a mutual fund prospectus _______.

__________ funds stand ready to redeem or issue shares at their net asset value.

SEC rule 12b-1 allows managers of certain funds to deduct expenses from fund assets,however,these expenses may not exceed of the fund's average net assets per year.

Sponsors of unit investment trusts earn a profit by ___________________.

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

Exam 4: Mutual Funds and Other Investment Companies

Measured by assets,about _____ of funds are money market funds.

Mutual funds account for roughly ______ percent of investment company assets.

The assets of a mutual fund are $25 million.The liabilities are $4 million.If the fund has 700,000 shares outstanding and pays a $3 dividend,what is the dividend yield?

Which of the following funds are usually most tax efficient?

The Vanguard 500 Index Fund tracks the performance of the S&P 500.To do so the fund buys shares in each S&P 500 company __________.

With respect to mutual funds,late trading refers to the practice of ________.

An open-end fund has a NAV of $16.50 per share.The fund charges a 6% load.What is the offering price?

Mutual funds provide the following for their shareholders:

Mutual fund returns may be granted pass-through status,if _________________.

Which of the following ETFs tracks the S&P 500 index?

Which of the following result in a taxable event for investors? I.Short-term capital gains distributions from the fund II.Dividend distributions from the fund III.Long-term capital gains distributions from the fund

A/an _____ is an example of an exchange-traded fund.

In the U.S.there are approximately _______ mutual funds offered by less than _______ fund families.

In 1999,the SEC established rules that should make a mutual fund prospectus _______.

__________ funds stand ready to redeem or issue shares at their net asset value.

SEC rule 12b-1 allows managers of certain funds to deduct __________ expenses from fund assets,however,these expenses may not exceed __________ of the fund's average net assets per year.

Sponsors of unit investment trusts earn a profit by ___________________.

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

In the U.S.there are approximately _ mutual funds offered by less than _ fund families.

SEC rule 12b-1 allows managers of certain funds to deduct expenses from fund assets,however,these expenses may not exceed of the fund's average net assets per year.