Question 1

Soft dollars are generated when

Accepted Answer

A)  a manager commits to paying a higher than normal brokerage fee in exchange for additional bundled services. 
B)  a manager commits to paying a higher than normal brokerage fee in exchange for secretarial services. 
C)  a manager commits to paying a higher than normal brokerage fee in exchange for office equipment. 
D)  a manager commits to paying a higher than normal brokerage fee in exchange for research services. 
E)  All of these are correct. 
A)  a manager commits to paying a higher than normal brokerage fee in exchange for additional bundled services. 
B)  a manager commits to paying a higher than normal brokerage fee in exchange for secretarial services. 
C)  a manager commits to paying a higher than normal brokerage fee in exchange for office equipment. 
D)  a manager commits to paying a higher than normal brokerage fee in exchange for research services. 
E)  All of these are correct.

Question 2

You are considering investing $1,000 in a load fund that charges a fee of 2.5 percent, with an expected return of 12 percent over the next year. Alternatively, you could invest in a no-load fund with similar risk that is expected to earn 8 percent and charges a 1/2 percent redemption fee. Which is better and by how much?

Accepted Answer

A)  load fund by $12.00 
B)  load fund by $15.32 
C)  load fund by $17.40 
D)  no-load fund by $6.55 
E)  no-load fund by $1.30 
A)  load fund by $12.00 
B)  load fund by $15.32 
C)  load fund by $17.40 
D)  no-load fund by $6.55 
E)  no-load fund by $1.30

Question 3

Suppose you consider investing $1,000 in a load fund that charges a fee of 2 percent, and you expect the fund to earn 11 percent over the next year. Alternatively, you could invest in a no-load fund with similar risk that is expected to earn 7 percent and charges a 1/2 percent redemption fee. Which is better and by how much?

Accepted Answer

A)  funds are equal 
B)  no-load fund by $36.98 
C)  load fund by $45.25 
D)  load fund by $23.15 
E)  no-load fund by $15.52 
A)  funds are equal 
B)  no-load fund by $36.98 
C)  load fund by $45.25 
D)  load fund by $23.15 
E)  no-load fund by $15.52

Question 4

Closed-end investment companies never sell at discounts to their NAV.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following are guiding principles for ethical behavior in the asset management industry as put forward by the CFA Center for Financial Market Integrity?

Accepted Answer

A)  The interests of investment professional come first. 
B)  The preferred method for promoting fair and efficient markets is to set up a central oversight board. 
C)  Financial markets in various countries should develop high-quality standards for reporting financial information that reflect local customs. 
D)  Financial statements should be reported from the perspective of firm shareholders. 
E)  All of these are correct. 
A)  The interests of investment professional come first. 
B)  The preferred method for promoting fair and efficient markets is to set up a central oversight board. 
C)  Financial markets in various countries should develop high-quality standards for reporting financial information that reflect local customs. 
D)  Financial statements should be reported from the perspective of firm shareholders. 
E)  All of these are correct.

Question 6

The main difference between a closed-end fund and an open-end fund is

Accepted Answer

A)  the way each is traded after the initial public offering. 
B)  there is no significant difference. 
C)  the minimum initial investment. 
D)  the type of allowable investments. 
E)  the way in which each is regulated by the SEC. 
A)  the way each is traded after the initial public offering. 
B)  there is no significant difference. 
C)  the minimum initial investment. 
D)  the type of allowable investments. 
E)  the way in which each is regulated by the SEC.

Question 7

The primary purpose of government regulations and voluntary standards in the professional asset management industry is to ensure that managers deal with all investors fairly and equitably and that information about investment performance is accurately reported.

Accepted Answer

A) True 
 B)False

Question 8

The total market value of all assets of a mutual fund divided by the number of shares of the fund is known as the net asset value.

Accepted Answer

A) True 
 B)False

Question 9

An investment vehicle that acts like a mutual fund of hedge funds and allows investors access to managers that may otherwise be unavailable is known as

Accepted Answer

A)  managed futures funds. 
B)  long-short equity funds. 
C)  fund of funds. 
D)  private equity funds. 
E)  leveraged Buyouts (LBOs). 
A)  managed futures funds. 
B)  long-short equity funds. 
C)  fund of funds. 
D)  private equity funds. 
E)  leveraged Buyouts (LBOs).

Question 10

The Investment Advisors Act of 1940

Accepted Answer

A)  contains various anti-fraud provisions and record keeping and reporting requirements for fund advisors. 
B)  regulates broker-dealers. 
C)  requires federal registration of all public offerings of securities. 
D)  regulates the structure and operations of mutual funds. 
E)  contains a code of ethics and standards of professional conduct. 
A)  contains various anti-fraud provisions and record keeping and reporting requirements for fund advisors. 
B)  regulates broker-dealers. 
C)  requires federal registration of all public offerings of securities. 
D)  regulates the structure and operations of mutual funds. 
E)  contains a code of ethics and standards of professional conduct.

Question 11

Which of the following are functions that a portfolio manager should perform for clients?

Accepted Answer

A)  determine investment objectives and constraints, diversify the portfolio, and eliminate tax payments 
B)  determine investment objectives, diversify the portfolio, maintain ethical standards, and eliminate tax payments 
C)  determine investment objectives and constraints, diversify the portfolio, and maintain ethical standards 
D)  determine constraints, diversify the portfolio, and eliminate tax payments 
E)  determine investment objectives and constraints, diversify the portfolio, eliminate tax payments, and achieve risk adjusted return superior to the relevant benchmark 
A)  determine investment objectives and constraints, diversify the portfolio, and eliminate tax payments 
B)  determine investment objectives, diversify the portfolio, maintain ethical standards, and eliminate tax payments 
C)  determine investment objectives and constraints, diversify the portfolio, and maintain ethical standards 
D)  determine constraints, diversify the portfolio, and eliminate tax payments 
E)  determine investment objectives and constraints, diversify the portfolio, eliminate tax payments, and achieve risk adjusted return superior to the relevant benchmark

Question 12

Which of the following is an approach to asset management?

Accepted Answer

A)  management and advisory firms 
B)  investment banks 
C)  strategic management 
D)  stock brokerage firms 
E)  chartered banks 
A)  management and advisory firms 
B)  investment banks 
C)  strategic management 
D)  stock brokerage firms 
E)  chartered banks

Question 13

In a convertible arbitrage strategy, hedge fund managers attempt to

Accepted Answer

A)  generate profits by taking advantage of convertible bond pricing disparities caused by changing market events. 
B)  generate profits by taking advantage of disparities in the relationship between prices for convertible bonds and the underlying common stock. 
C)  generate profits by taking advantage of disparities in the relationship between prices for convertible bonds and the underlying common stock option. 
D)  purchase bonds of distressed companies. 
E)  profit from changes in the global economy. 
A)  generate profits by taking advantage of convertible bond pricing disparities caused by changing market events. 
B)  generate profits by taking advantage of disparities in the relationship between prices for convertible bonds and the underlying common stock. 
C)  generate profits by taking advantage of disparities in the relationship between prices for convertible bonds and the underlying common stock option. 
D)  purchase bonds of distressed companies. 
E)  profit from changes in the global economy.

Question 14

The following are examples of mutual fund companies:

Accepted Answer

A)  private equity. 
B)  bond funds. 
C)  hedge funds. 
D)  venture capital. 
E)  buyout-oriented private equity. 
A)  private equity. 
B)  bond funds. 
C)  hedge funds. 
D)  venture capital. 
E)  buyout-oriented private equity.

Question 15

Which of the following is a characteristic of hedge funds?

Accepted Answer

A)  They are generally less restricted in how and where they can make investments. 
B)  They are more liquid than mutual fund shares. 
C)  They have no limitations on when and how often investment capital can be contributed or removed. 
D)  They are more restricted in how and where they can make investments. 
E)  They are highly correlated with traditional asset class investments. 
A)  They are generally less restricted in how and where they can make investments. 
B)  They are more liquid than mutual fund shares. 
C)  They have no limitations on when and how often investment capital can be contributed or removed. 
D)  They are more restricted in how and where they can make investments. 
E)  They are highly correlated with traditional asset class investments.

Question 16

In the case of investment companies,

Accepted Answer

A)  investors deal with a fund company and do not have separate accounts tailored to their specific needs. 
B)  investors deal with a fund company and have separate accounts tailored to their specific needs. 
C)  investors deal with an asset manager and do not have separate accounts tailored to their specific needs. 
D)  investors deal with an asset manager and have separate accounts tailored to their specific needs. 
E)  None of these are correct. 
A)  investors deal with a fund company and do not have separate accounts tailored to their specific needs. 
B)  investors deal with a fund company and have separate accounts tailored to their specific needs. 
C)  investors deal with an asset manager and do not have separate accounts tailored to their specific needs. 
D)  investors deal with an asset manager and have separate accounts tailored to their specific needs. 
E)  None of these are correct.

Question 17

A common hedge fund strategy known as long-short equity is a type of arbitrage strategy.

Accepted Answer

A) True 
 B)False

Question 18

If the Micro mutual fund was originated by selling $250,000 of stock at $10.00 per share. Calculate its current NAV if the fund consists of the following four stocks.

Accepted Answer

A)  $5.78 
B)  $10.00 
C)  $12.43 
D)  $16.11 
E)  $19.21 
A)  $5.78 
B)  $10.00 
C)  $12.43 
D)  $16.11 
E)  $19.21

Question 19

Funds that attempt to provide current income, safety of principal and liquidity are known as

Accepted Answer

A)  balanced funds. 
B)  flexible funds. 
C)  income funds. 
D)  money market funds. 
E)  index funds. 
A)  balanced funds. 
B)  flexible funds. 
C)  income funds. 
D)  money market funds. 
E)  index funds.

Question 20

The gross return of closed-end investments companies has typically been

Accepted Answer

A)  10-20 percent less than their NAV. 
B)  10-15 percent less than their NAV. 
C)  5-20 percent less than their NAV. 
D)  about the same as the net return. 
E)  less than the net return. 
A)  10-20 percent less than their NAV. 
B)  10-15 percent less than their NAV. 
C)  5-20 percent less than their NAV. 
D)  about the same as the net return. 
E)  less than the net return.

Soft dollars are generated when

Closed-end investment companies never sell at discounts to their NAV.

Which of the following are guiding principles for ethical behavior in the asset management industry as put forward by the CFA Center for Financial Market Integrity?

The main difference between a closed-end fund and an open-end fund is

The primary purpose of government regulations and voluntary standards in the professional asset management industry is to ensure that managers deal with all investors fairly and equitably and that information about investment performance is accurately reported.

The total market value of all assets of a mutual fund divided by the number of shares of the fund is known as the net asset value.

An investment vehicle that acts like a mutual fund of hedge funds and allows investors access to managers that may otherwise be unavailable is known as

The Investment Advisors Act of 1940

Which of the following are functions that a portfolio manager should perform for clients?

Which of the following is an approach to asset management?

In a convertible arbitrage strategy, hedge fund managers attempt to

The following are examples of mutual fund companies:

Which of the following is a characteristic of hedge funds?

In the case of investment companies,

A common hedge fund strategy known as long-short equity is a type of arbitrage strategy.

If the Micro mutual fund was originated by selling $250,000 of stock at $10.00 per share. Calculate its current NAV if the fund consists of the following four stocks.

Funds that attempt to provide current income, safety of principal and liquidity are known as

The gross return of closed-end investments companies has typically been

The Investment Setting

The Investment Setting: Part A

Asset Allocation and Security Selection

Asset Allocation and Security Selection: Part A

Organization and Functioning of Securities Markets

Security Market Indexes and Index Funds

Efficient Capital Markets, Behavioral Finance, and Technical Analysis

An Introduction to Portfolio Management

An Introduction to Portfolio Management: Part A

An Introduction to Portfolio Management: Part B

Asset Pricing Models

Equity Valuation

The Top-Down Approach to Market, Industry, and Company Analysis

The Practice of Fundamental Investing

Equity Portfolio Management Strategies

Bond Fundamentals and Valuation

Bond Analysis and Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward, Futures, and Swap Contracts

Option Contracts

Evaluation of Portfolio Performance

Filters

Exam 17: Professional Money Management, Alternative Assets, and Industry Ethics

Soft dollars are generated when

Closed-end investment companies never sell at discounts to their NAV.

Which of the following are guiding principles for ethical behavior in the asset management industry as put forward by the CFA Center for Financial Market Integrity?

The main difference between a closed-end fund and an open-end fund is

The primary purpose of government regulations and voluntary standards in the professional asset management industry is to ensure that managers deal with all investors fairly and equitably and that information about investment performance is accurately reported.

The total market value of all assets of a mutual fund divided by the number of shares of the fund is known as the net asset value.

An investment vehicle that acts like a mutual fund of hedge funds and allows investors access to managers that may otherwise be unavailable is known as

The Investment Advisors Act of 1940

Which of the following are functions that a portfolio manager should perform for clients?

Which of the following is an approach to asset management?

In a convertible arbitrage strategy, hedge fund managers attempt to

The following are examples of mutual fund companies:

Which of the following is a characteristic of hedge funds?

In the case of investment companies,

A common hedge fund strategy known as long-short equity is a type of arbitrage strategy.

If the Micro mutual fund was originated by selling $250,000 of stock at $10.00 per share. Calculate its current NAV if the fund consists of the following four stocks.

Funds that attempt to provide current income, safety of principal and liquidity are known as

The gross return of closed-end investments companies has typically been

The Investment Setting

The Investment Setting: Part A

Asset Allocation and Security Selection

Asset Allocation and Security Selection: Part A

Organization and Functioning of Securities Markets

Security Market Indexes and Index Funds

Efficient Capital Markets, Behavioral Finance, and Technical Analysis

An Introduction to Portfolio Management

An Introduction to Portfolio Management: Part A

An Introduction to Portfolio Management: Part B

Asset Pricing Models

Equity Valuation

The Top-Down Approach to Market, Industry, and Company Analysis

The Practice of Fundamental Investing

Equity Portfolio Management Strategies

Bond Fundamentals and Valuation

Bond Analysis and Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward, Futures, and Swap Contracts

Option Contracts

Evaluation of Portfolio Performance

Filters