Question 1

Mutual fund investors delegate all of the following decisions to the fund's managers except

Accepted Answer

A)   which companies and industries to invest in.
B)   when to buy and sell individual stocks.
C)   how many securities to hold in the portfolio.
D)   how to allocate investments among different classes of assets such as stocks, bonds, cash and real estate.

Question 2

A closed-end fund with an NAV of $9.60 and a market price of $10.25 is selling at a premium of 6.8%.

Accepted Answer

A) True 
 B)False

Question 3

Performance fees based on profits earned by the fund are typical of

Accepted Answer

A)   hedge funds.
B)   exchange traded funds.
C)   closed-end investment companies.
D)   open end mutual funds.

Question 4

During the 5 year market cycle of 2004-2008, in which category of funds did a majority of funds outperform the market average?

Accepted Answer

A)   large cap funds.
B)   small cap funds.
C)   asset allocation funds.
D)   in no category did a majority of funds outperform the market average.

Question 5

Trading in closed-end investment companies takes between investors in the open market.

Accepted Answer

A) True 
 B)False

Question 6

Automatic investment plans makes it easier for investors to save money.

Accepted Answer

A) True 
 B)False

Question 7

Which one of the following statements is correct concerning international funds?

Accepted Answer

A)   A devaluation of the dollar causes returns on foreign investments to improve from a U.S. perspective.
B)   International funds are considered low-risk investments.
C)   Balance-of-trade positions do NOT affect the rate of return from a U.S. perspective.
D)   Technically, global funds can only invest in foreign securities.

Question 8

Which one of the following statements is correct concerning players in the mutual fund industry?

Accepted Answer

A)   Security analysts and traders work for the management company.
B)   Normally a bank serves as the custodian.
C)   The management company maintains the shareholder records.
D)   The mutual fund shareholders are the owners of the management company.

Question 9

The maximum average maturity of the holdings within a money market account must be 6 months or less.

Accepted Answer

A) True 
 B)False

Question 10

Value funds seek stocks
I.with low dividend yields.
II.with potential for growth.
III.with low P/E ratios.
IV.of newly discovered firms.

Accepted Answer

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

Question 11

IPOs for closed-end funds are priced at NAV.

Accepted Answer

A) True 
 B)False

Question 12

One characteristic of bond funds is the

Accepted Answer

A)   requirement of a minimum initial investment of $5,000 or more.
B)   high anticipated short-term growth potential.
C)   fluctuation in value in response to changing interest rates.
D)   extremely aggressive trading approach.

Question 13

A "t" in the newspaper behind a fund's name indicates that the fund charges a

Accepted Answer

A)   front-end load.
B)   back-end load.
C)   front-end load and also a 12(b) -1 fee.
D)   back-end load and also a 12(b) -1 fee.

Question 14

The transfer agent for a mutual fund physically safeguards the securities being bought and sold by that firm.

Accepted Answer

A) True 
 B)False

Question 15

Typical services offered by mutual funds include:
I.automatic investing from a payroll withholding plan
II.automatic reinvestment of dividends and capital gains
III systematic withdrawal plans
IV automatic transfers from one fund type to another when market conditions change

Accepted Answer

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

Question 16

Mutual fund fees are disclosed in the fund prospectus.

Accepted Answer

A) True 
 B)False

Question 17

Mutual funds can carry a number of different types of sales charges and fees.Briefly explain the following such expenses.
(a)a front-end load
(b)a back-end load
(c)a 12(b)-1 fee

Accepted Answer

(a)A front-end load is a sales commissio...

Question 18

Nearly all mutual funds operate as regulated investment companies.This means that

Accepted Answer

A)   they are no-load funds.
B)   portfolio decisions are mandated by government authorities.
C)   they do not pay taxes on their income.
D)   their investments are guaranteed by the FDIC.

Question 19

Last year at this time, a mutual fund had an NAV of $13.20 per share.Over the past year the fund paid dividends of $0.70 per share and had a capital gains distribution of $1.20 per share.What is the holding period return assuming that the current NAV is $14.42?

Accepted Answer

A)   13.2%
B)   14.4%
C)   21.6%
D)   23.6%

Question 20

Index funds merely attempt to match the performance of some benchmark, not to outperform it.

Accepted Answer

A) True 
 B)False

Exam 12: Mutual Funds: Professionally Managed Portfolios

Typical services offered by mutual funds include: I.automatic investing from a payroll withholding plan II.automatic reinvestment of dividends and capital gains III systematic withdrawal plans IV automatic transfers from one fund type to another when market conditions change

Correct AnswerverifiedShow Answer

Which one of the following statements is correct concerning players in the mutual fund industry?

Correct AnswerverifiedShow Answer

Automatic investment plans makes it easier for investors to save money.

Correct AnswerverifiedShow Answer

The transfer agent for a mutual fund physically safeguards the securities being bought and sold by that firm.

Correct AnswerverifiedShow Answer

Value funds seek stocks I.with low dividend yields. II.with potential for growth. III.with low P/E ratios. IV.of newly discovered firms.

Correct AnswerverifiedShow Answer

Last year at this time, a mutual fund had an NAV of $13.20 per share.Over the past year the fund paid dividends of $0.70 per share and had a capital gains distribution of $1.20 per share.What is the holding period return assuming that the current NAV is $14.42?

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One characteristic of bond funds is the

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The maximum average maturity of the holdings within a money market account must be 6 months or less.

Correct AnswerverifiedShow Answer

A closed-end fund with an NAV of $9.60 and a market price of $10.25 is selling at a premium of 6.8%.

Correct AnswerverifiedShow Answer

A "t" in the newspaper behind a fund's name indicates that the fund charges a

Correct AnswerverifiedShow Answer

Mutual funds can carry a number of different types of sales charges and fees.Briefly explain the following such expenses. (a)a front-end load (b)a back-end load (c)a 12(b)-1 fee

Correct Answerverified(a)A front-end load is a sales commissio...View AnswerShow Answer

Index funds merely attempt to match the performance of some benchmark, not to outperform it.

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During the 5 year market cycle of 2004-2008, in which category of funds did a majority of funds outperform the market average?

Correct AnswerverifiedShow Answer

Performance fees based on profits earned by the fund are typical of

Correct AnswerverifiedShow Answer

Mutual fund investors delegate all of the following decisions to the fund's managers except

Correct AnswerverifiedShow Answer

Mutual fund fees are disclosed in the fund prospectus.

Correct AnswerverifiedShow Answer

Trading in closed-end investment companies takes between investors in the open market.

Correct AnswerverifiedShow Answer

Which one of the following statements is correct concerning international funds?

Correct AnswerverifiedShow Answer

IPOs for closed-end funds are priced at NAV.

Correct AnswerverifiedShow Answer

Nearly all mutual funds operate as regulated investment companies.This means that

Correct AnswerverifiedShow Answer

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(a)A front-end load is a sales commissio...
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