Question 1

If a mutual fund has multiple-class shares, which class typically has a front-end load?

Accepted Answer

A)  Class A 
B)  Class B 
C)  Class C 
D)  Class I 
A)  Class A 
B)  Class B 
C)  Class C 
D)  Class I

Question 2

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

Question 3

________ are mutual funds that vary the proportions of funds invested in particular market sectors according to the fund manager's forecast of the performance of that market sector.

Accepted Answer

A)  Asset allocation funds 
B)  Balanced funds 
C)  Index funds 
D)  Income funds 
A)  Asset allocation funds 
B)  Balanced funds 
C)  Index funds 
D)  Income funds

Question 4

Which of the following 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 5

The average maturity of fund investments in a money market mutual fund is ________.

Accepted Answer

A)  slightly more than 1 month 
B)  slightly more than 1 year 
C)  about 9 months 
D)  between 2 and 3 years 
A)  slightly more than 1 month 
B)  slightly more than 1 year 
C)  about 9 months 
D)  between 2 and 3 years

Question 6

Part B of a mutual fund prospectus contains information about:
I. Fund holdings by directors and officers
II. Front-end and back-end loads
III. Securities held by the fund at the end of the fiscal year

Accepted Answer

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

Question 7

As of 2017, approximately ________ of mutual fund assets were invested in bond funds.

Accepted Answer

A)  22% 
B)  32% 
C)  37% 
D)  47% 
A)  22% 
B)  32% 
C)  37% 
D)  47%

Question 8

Net asset value is defined as ________.

Accepted Answer

A)  book value of assets divided by shares outstanding 
B)  book value of assets minus liabilities divided by shares outstanding 
C)  market value of assets divided by shares outstanding 
D)  market value of assets minus liabilities divided by shares outstanding 
A)  book value of assets divided by shares outstanding 
B)  book value of assets minus liabilities divided by shares outstanding 
C)  market value of assets divided by shares outstanding 
D)  market value of assets minus liabilities divided by shares outstanding

Question 9

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 10

A mutual fund has $50 million in assets at the beginning of the year and 1 million shares outstanding throughout the year. Throughout the year assets grow at 12%. The fund imposes a 12b-1 fee on all shares equal to 1%. The fee is imposed on year-end asset values. If there are no distributions, what is the end-of-year NAV for the fund?

Accepted Answer

A)  $50 
B)  $55.44 
C)  $56.12 
D)  $54.55 
A)  $50 
B)  $55.44 
C)  $56.12 
D)  $54.55

If a mutual fund has multiple-class shares, which class typically has a front-end load?

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.

________ are mutual funds that vary the proportions of funds invested in particular market sectors according to the fund manager's forecast of the performance of that market sector.

Which of the following is a false statement regarding open-end mutual funds?

The average maturity of fund investments in a money market mutual fund is ________.

Part B of a mutual fund prospectus contains information about: I. Fund holdings by directors and officers II. Front-end and back-end loads III. Securities held by the fund at the end of the fiscal year

As of 2017, approximately ________ of mutual fund assets were invested in bond funds.

Net asset value is defined as ________.

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

Investments: Background and Issues

Asset Classes and Financial Instruments

Securities Markets

Risk, Return, and the Historical Record

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

Evaluating Investment Performance

International Diversification

Hedge Funds

Taxes, Inflation, and Investment Strategy

Investors and the Investment Process

Filters

Exam 4: Mutual Funds and Other Investment Companies

If a mutual fund has multiple-class shares, which class typically has a front-end load?

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.

________ are mutual funds that vary the proportions of funds invested in particular market sectors according to the fund manager's forecast of the performance of that market sector.

Which of the following is a false statement regarding open-end mutual funds?

The average maturity of fund investments in a money market mutual fund is ________.

Part B of a mutual fund prospectus contains information about: I. Fund holdings by directors and officers II. Front-end and back-end loads III. Securities held by the fund at the end of the fiscal year

As of 2017, approximately ________ of mutual fund assets were invested in bond funds.

Net asset value is defined as ________.

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

Investments: Background and Issues

Asset Classes and Financial Instruments

Securities Markets

Risk, Return, and the Historical Record

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

Evaluating Investment Performance

International Diversification

Hedge Funds

Taxes, Inflation, and Investment Strategy

Investors and the Investment Process

Filters

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.