Question 1

Match the following pieces of legislation with the function achieved by each regulation as stated in question
-Sets rules to prevent conflicts of interest, fraud, and excessive fees or charges for fund shares.

Accepted Answer

A) Securities Act of 1933 
B) Securities Exchange Act of 1934 
C) Investment Advisers Act 
D) Investment Company Act 
E) Insider Trading and Securities Fraud Enforcement Act of 1988
F)Market Reform Act of 1990
G)National Securities Markets Improvement Act of 1996

Question 2

Long-term mutual funds invest primarily in long-term, fixed-income securities such as corporate and/or government bonds.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is one of the characteristics of household mutual fund owners as of 2012?

Accepted Answer

A) The typical fund-owning household has $120,000 invested. 
B) 52 percent of the families are headed by someone without a college degree. 
C) The median age of mutual fund holders is 51. 
D) 21 percent of investors that conducted equity fund transactions used the internet. 
E) All of the above.

Question 4

The hedge fund industry is built on the theory that

Accepted Answer

A) a profit can always be made if each investment has an off-setting position to cover any losses. 
B) proper diversification can be attained with larger sums of money and fewer assets. 
C) wealthy individuals should be expected to make more informed investment decisions and can take on higher levels of risk. 
D) strategies such as program trading and arbitrage are only successful if leverage (borrowed funds) are used. 
E) it takes money to make money.

Question 5

Match the following pieces of legislation with the function achieved by each regulation as stated in question
-Makes the purchase and sale of mutual fund shares subject to various antifraud provisions.

Accepted Answer

A) Securities Act of 1933 
B) Securities Exchange Act of 1934 
C) Investment Advisers Act 
D) Investment Company Act 
E) Insider Trading and Securities Fraud Enforcement Act of 1988
F)Market Reform Act of 1990
G)National Securities Markets Improvement Act of 1996

Question 6

A change from commercial bank deposits to money market mutual funds typically allows an investor to benefit from higher yields, but with the cost of losing deposit insurance coverage.

Accepted Answer

A) True 
 B)False

Question 7

Match the following pieces of legislation with the function achieved by each regulation as stated in question
-Requires mutual funds to develop mechanisms and procedures to avoid insider trading abuses.

Accepted Answer

A) Securities Act of 1933 
B) Securities Exchange Act of 1934 
C) Investment Advisers Act 
D) Investment Company Act 
E) Insider Trading and Securities Fraud Enforcement Act of 1988
F)Market Reform Act of 1990
G)National Securities Markets Improvement Act of 1996

Question 8

Mutual funds are financial intermediaries that invest in diversified portfolios of assets.

Accepted Answer

A) True 
 B)False

Question 9

The Securities Act of 1933 requires that a mutual fund furnish full and accurate information on all financial and corporate matters to prospective fund purchasers.

Accepted Answer

A) True 
 B)False

Question 10

These "more risky" hedge funds aim to profit from changes in global economies, typically brought about by shifts in government policy that impact interest rates.

Accepted Answer

A) Distressed securities funds. 
B) Macro funds. 
C) Value funds. 
D) Opportunistic funds. 
E) Market timing funds.

Question 11

The largest asset category of mutual funds as of 2012 was

Accepted Answer

A) corporate equities. 
B) credit market instruments. 
C) U.S.government securities. 
D) corporate and foreign bonds. 
E) municipal securities.

Question 12

Match the following pieces of legislation with the function achieved by each regulation as stated in question
-Exempts mutual fund sellers from oversight by state securities regulators.

Accepted Answer

A) Securities Act of 1933 
B) Securities Exchange Act of 1934 
C) Investment Advisers Act 
D) Investment Company Act 
E) Insider Trading and Securities Fraud Enforcement Act of 1988
F)Market Reform Act of 1990
G)National Securities Markets Improvement Act of 1996

Exam 5: Financial Services: Mutual Funds and Hedge Funds

Match the following pieces of legislation with the function achieved by each regulation as stated in question -Sets rules to prevent conflicts of interest, fraud, and excessive fees or charges for fund shares.

Long-term mutual funds invest primarily in long-term, fixed-income securities such as corporate and/or government bonds.

Which of the following is one of the characteristics of household mutual fund owners as of 2012?

The hedge fund industry is built on the theory that

Match the following pieces of legislation with the function achieved by each regulation as stated in question -Makes the purchase and sale of mutual fund shares subject to various antifraud provisions.

A change from commercial bank deposits to money market mutual funds typically allows an investor to benefit from higher yields, but with the cost of losing deposit insurance coverage.

Match the following pieces of legislation with the function achieved by each regulation as stated in question -Requires mutual funds to develop mechanisms and procedures to avoid insider trading abuses.

Mutual funds are financial intermediaries that invest in diversified portfolios of assets.

The Securities Act of 1933 requires that a mutual fund furnish full and accurate information on all financial and corporate matters to prospective fund purchasers.

These "more risky" hedge funds aim to profit from changes in global economies, typically brought about by shifts in government policy that impact interest rates.

The largest asset category of mutual funds as of 2012 was

Match the following pieces of legislation with the function achieved by each regulation as stated in question -Exempts mutual fund sellers from oversight by state securities regulators.