Question 1

A mutual fund typically performs all of the following functions, except

Accepted Answer

A)  Provides alternative risk-return options. 
B)  Eliminates unsystematic risk. 
C)  Provides diversification. 
D)  Derives a risk-adjusted performance that is consistently superior to risk-adjusted net return of the aggregate market. 
E)  Administers the account, keeps records and provides timely information. 
A)  Provides alternative risk-return options. 
B)  Eliminates unsystematic risk. 
C)  Provides diversification. 
D)  Derives a risk-adjusted performance that is consistently superior to risk-adjusted net return of the aggregate market. 
E)  Administers the account, keeps records and provides timely information.

Question 2

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 3

An investor should be cautious when selecting a fund based solely on the manager's past performance, since past performance may not be repeated in the future.

Accepted Answer

A) True 
 B)False

Question 4

Consider X Bond Fund which consists of the 5 bonds shown below with no liabilities. $$\begin{array} { l c c } 
\text { Company } & \text { Current Band Value } & \text { \# Bands } \
\hline \text { Komkn } & 980 & 120 \
\text { Hijack } & 1010 & 150 \
\text { Mitsue } & 1200 & 100 \
\text { Smitsu } & 800 & 120 \
\text { Jones } & 600 & 150
\end{array}$$ If initially the value of the fund was $1,000,000 and the original shares were offered to the public with a NAV of $25 per share, what is the current NAV of the fund?

Accepted Answer

A)  $25.00 
B)  $27.68 
C)  $25.68 
D)  $28.76 
E)  $26.78 
A)  $25.00 
B)  $27.68 
C)  $25.68 
D)  $28.76 
E)  $26.78

Question 5

On January 2, 2007, you invest $10,000 in Megabucks Mutual Fund, a load fund that charges a fee of 2%. The fund's returns were 13% in 2007, 11% in 2008, and 8% in 2009. On December 31, 2009, you redeem all your shares. The dollar value is

Accepted Answer

A)  $13,600.00 
B)  $13,275.51 
C)  $13,297.67 
D)  $13,995.75 
E)  $10,000.00 
A)  $13,600.00 
B)  $13,275.51 
C)  $13,297.67 
D)  $13,995.75 
E)  $10,000.00

Question 6

What type of funds are typically no-load funds that impose no penalty for early withdrawal and generally allow holders to write checks against their account?

Accepted Answer

A)  Mutual funds 
B)  Open-end funds 
C)  Closed-end funds 
D)  Money market funds 
E)  Balanced funds 
A)  Mutual funds 
B)  Open-end funds 
C)  Closed-end funds 
D)  Money market funds 
E)  Balanced funds

Question 7

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 8

In a long short-short hedge fund strategy

Accepted Answer

A)  Managers take long positions in undervalued stocks and short positions in overvalued stocks. 
B)  Managers take short positions in undervalued stocks and long positions in overvalued stocks. 
C)  Managers take offsetting risk positions on the long and short side. 
D)  All of the above. 
E)  None of the above. 
A)  Managers take long positions in undervalued stocks and short positions in overvalued stocks. 
B)  Managers take short positions in undervalued stocks and long positions in overvalued stocks. 
C)  Managers take offsetting risk positions on the long and short side. 
D)  All of the above. 
E)  None of the above.

Question 9

On January 2, 2007, you invest $50,000 in A Mutual Fund, a load fund that charges a fee of 7%. The fund's returns were 12.8% in 2007, 13.9% in 2008, and 7.9% in 2009. On December 31, 2009, you redeem all your shares in A. The dollar value is

Accepted Answer

A)  $64,462.57 
B)  $644,625.70 
C)  $50,000.00 
D)  $6,446.25 
E)  $10,000.00 
A)  $64,462.57 
B)  $644,625.70 
C)  $50,000.00 
D)  $6,446.25 
E)  $10,000.00

Question 10

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. $\begin{array}{ccc}
\text { Stock } & \text { Shares } & \text { Price } \
\hline \text { Q } & 9,500 & \$ 10.75 \
\mathrm{R} & 7,200 & \$ 13.90 \
\mathrm{~S} & 4,500 & \$ 22.25 \
\mathrm{~T} & 6,800 & \$ 14.75
\end{array}$

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 11

Diversifying a portfolio to eliminate unsystematic risk is one of the major benefits of investing in mutual funds.

Accepted Answer

A) True 
 B)False

Question 12

Investing in emerging markets can be viewed as a global application of

Accepted Answer

A)  Fixed-income arbitrage. 
B)  Convertible arbitrage. 
C)  Merger arbitrage. 
D)  Distressed opportunistic strategies. 
E)  Equity market neutral. 
A)  Fixed-income arbitrage. 
B)  Convertible arbitrage. 
C)  Merger arbitrage. 
D)  Distressed opportunistic strategies. 
E)  Equity market neutral.

Question 13

An open-end investment company differs from a closed-end investment company by the way they operate after the initial public offering.

Accepted Answer

A) True 
 B)False

Question 14

An open-end investment company functions like any other public firm.

Accepted Answer

A) True 
 B)False

A mutual fund typically performs all of the following functions, except

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

An investor should be cautious when selecting a fund based solely on the manager's past performance, since past performance may not be repeated in the future.

On January 2, 2007, you invest $10,000 in Megabucks Mutual Fund, a load fund that charges a fee of 2%. The fund's returns were 13% in 2007, 11% in 2008, and 8% in 2009. On December 31, 2009, you redeem all your shares. The dollar value is

What type of funds are typically no-load funds that impose no penalty for early withdrawal and generally allow holders to write checks against their account?

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.

In a long short-short hedge fund strategy

On January 2, 2007, you invest $50,000 in A Mutual Fund, a load fund that charges a fee of 7%. The fund's returns were 12.8% in 2007, 13.9% in 2008, and 7.9% in 2009. On December 31, 2009, you redeem all your shares in A. The dollar value is

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. Stock Shares Price Q 9,500 \ 10.75 7,200 \ 13.90 4,500 \ 22.25 6,800 \ 14.75

Diversifying a portfolio to eliminate unsystematic risk is one of the major benefits of investing in mutual funds.

Investing in emerging markets can be viewed as a global application of

An open-end investment company differs from a closed-end investment company by the way they operate after the initial public offering.

An open-end investment company functions like any other public firm.

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Securities Markets and the Economy

Efficient Capital Markets

An Introduction to Portfolio Management

Asset Pricing Models: Capm and Apt

Economic and Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

An Introduction to Derivative Markets and Securities

Derivatives: Analysis and Valuation

Equity Portfolio Management Strategies

Bond Portfolio Management Strategies

Evaluation of Portfolio Performance

Analysis of Financial Statements

An Introduction to Security Valuation

Web Appendix: A Review of Statistics and the Security Market Line

Web Appendix: A Review of Statistics and the Security Market Line

Appendix: Objectives and Constraints of Institutional Investors

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

A mutual fund typically performs all of the following functions, except

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

An investor should be cautious when selecting a fund based solely on the manager's past performance, since past performance may not be repeated in the future.

On January 2, 2007, you invest $10,000 in Megabucks Mutual Fund, a load fund that charges a fee of 2%. The fund's returns were 13% in 2007, 11% in 2008, and 8% in 2009. On December 31, 2009, you redeem all your shares. The dollar value is

What type of funds are typically no-load funds that impose no penalty for early withdrawal and generally allow holders to write checks against their account?

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.

In a long short-short hedge fund strategy

On January 2, 2007, you invest $50,000 in A Mutual Fund, a load fund that charges a fee of 7%. The fund's returns were 12.8% in 2007, 13.9% in 2008, and 7.9% in 2009. On December 31, 2009, you redeem all your shares in A. The dollar value is

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. Stock Shares Price Q 9,500 \ 10.75 7,200 \ 13.90 4,500 \ 22.25 6,800 \ 14.75

Diversifying a portfolio to eliminate unsystematic risk is one of the major benefits of investing in mutual funds.

Investing in emerging markets can be viewed as a global application of

An open-end investment company differs from a closed-end investment company by the way they operate after the initial public offering.

An open-end investment company functions like any other public firm.

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Securities Markets and the Economy

Efficient Capital Markets

An Introduction to Portfolio Management

Asset Pricing Models: Capm and Apt

Economic and Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

An Introduction to Derivative Markets and Securities

Derivatives: Analysis and Valuation

Equity Portfolio Management Strategies

Bond Portfolio Management Strategies

Evaluation of Portfolio Performance

Analysis of Financial Statements

An Introduction to Security Valuation

Web Appendix: A Review of Statistics and the Security Market Line

Web Appendix: A Review of Statistics and the Security Market Line

Appendix: Objectives and Constraints of Institutional Investors

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