Question 1

Money market fund rates do not closely track short-term market interest rates,because the maturities of assets held in money market portfolios generally range from one to six months.

Accepted Answer

A) True 
 B)False

Question 2

On average,mutual funds tend to outperform the market over the long run.

Accepted Answer

A) True 
 B)False

Question 3

Yields on money market funds are closely associated with:

Accepted Answer

A)  short-term interest rates.
B)  the prime rate.
C)  long-term interest rates.
D)  None of the aboveE) A) and B)
F) None of the above

Question 4

The prospectus is designed to provide a broad overview of the mutual fund,but is not required to disclose its investment focus or the investment style that it represents.

Accepted Answer

A) True 
 B)False

Question 5

In a closed-end mutual fund,shares are traded:

Accepted Answer

A)  through brokers.
B)  on an exchange.
C)  between shareholders.
D)  B and CE) A) and D)
F) A) and C)

Question 6

Assuming no reinvestment,the total return on mutual fund shares is the total ending value of your shares,divided by the total beginning value of your shares.

Accepted Answer

A) True 
 B)False

Question 7

Exchange-traded funds (ETFs)are similar to index mutual funds,but they trade on stock exchanges like common stock.

Accepted Answer

A) True 
 B)False

Question 8

When you invest in a typical load fund with an 8.5% load,the fund must appreciate by over 10% in value for you to break even on your investment.

Accepted Answer

A) True 
 B)False

Question 9

Exchange-Traded Funds offer the investor many advantages over open-end and closed-end mutual funds.Which of the following are comparative advantages?

Accepted Answer

A)  There are global and international funds to choose
B)  There are over 80 broad-based domestic equity index funds
C)  They are bought and sold like common stocks
D)  All of the above are comparative advantagesE) A) and B)
F) None of the above

Question 10

Direct sources of return on a mutual fund investment include:

Accepted Answer

A)  dividends distributed.
B)  interest accumulated.
C)  stock market appreciation.
D)  dividends distributed and stock market appreciation.E) A) and B)
F) C) and D)

Question 11

The Hirt & Block mutual fund has assets of $147 million,liabilities of $7 million and 7 million shares outstanding.What is the net asset value per share?

Accepted Answer

A)  $20 per share
B)  $21 per share
C)  $22 per share
D)  None of the aboveE) B) and D)
F) All of the above

Question 12

The chief disadvantage of front-end load funds is that the investor has less money to invest after commissions.

Accepted Answer

A) True 
 B)False

Question 13

As of 2009,no-load funds made up close to 65% of all mutual fund assets.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a disadvantage of investing in mutual funds?

Accepted Answer

A)  They do not outperform the market as a group
B)  Some mutual funds may be expensive to purchase
C)  Mutual funds provide more diversification than investing in individual securities.
D)  With 5,000 funds to choose from,the selection of a fund is just as difficult as selecting an individual stockE) A) and C)
F) All of the above

Question 15

Which is not an advantage of exchange-traded funds (ETFs) ?

Accepted Answer

A)  Their expense ratios are lower than mutual funds
B)  Because they imitate an index,there are no real research costs
C)  They can be bought and sold all day long at a price that is almost exactly the net asset value of the stocks in the index
D)  The assets in the portfolio are marked to market continuously
E)  They are open-ended funds that have reasonably low sales expensesF) A) and D)
G) A) and C)

Question 16

Closed-end funds have a fixed number of shares;open-end funds do not.

Accepted Answer

A) True 
 B)False

Question 17

A closed-end fund might trade for less than net asset value if:

Accepted Answer

A)  the fund has a poor record of prior performance.
B)  it is a new fund trying to attract new investors.
C)  it is heavily invested in an unpopular industry.
D)  A and CE) A) and B)
F) A) and C)

Question 18

Shares of a closed-end fund trade on an exchange,just like stocks.

Accepted Answer

A) True 
 B)False

Question 19

At the end of 2009,approximately 43% of U.S.households owned shares in mutual funds.

Accepted Answer

A) True 
 B)False

Question 20

________ have a fixed supply of shares,which often trade at a discount from the market value of assets held.

Accepted Answer

A)  Stock funds
B)  Bond funds
C)  Closed-end funds
D)  Open-end fundsE) B) and C)
F) All of the above

Exam 4: Investment Companies: Mutual Funds, exchange-Traded Funds, closed-End Funds, and Unit Investment Trusts

When you invest in a typical load fund with an 8.5% load,the fund must appreciate by over 10% in value for you to break even on your investment.

Correct AnswerverifiedShow Answer

The chief disadvantage of front-end load funds is that the investor has less money to invest after commissions.

Correct AnswerverifiedShow Answer

Exchange-Traded Funds offer the investor many advantages over open-end and closed-end mutual funds.Which of the following are comparative advantages?

Correct AnswerverifiedShow Answer

Assuming no reinvestment,the total return on mutual fund shares is the total ending value of your shares,divided by the total beginning value of your shares.

Correct AnswerverifiedShow Answer

Which is not an advantage of exchange-traded funds (ETFs) ?

Correct AnswerverifiedShow Answer

A closed-end fund might trade for less than net asset value if:

Correct AnswerverifiedShow Answer

At the end of 2009,approximately 43% of U.S.households owned shares in mutual funds.

Correct AnswerverifiedShow Answer

________ have a fixed supply of shares,which often trade at a discount from the market value of assets held.

Correct AnswerverifiedShow Answer

As of 2009,no-load funds made up close to 65% of all mutual fund assets.

Correct AnswerverifiedShow Answer

Which of the following is not a disadvantage of investing in mutual funds?

Correct AnswerverifiedShow Answer

The Hirt & Block mutual fund has assets of $147 million,liabilities of $7 million and 7 million shares outstanding.What is the net asset value per share?

Correct AnswerverifiedShow Answer

Direct sources of return on a mutual fund investment include:

Correct AnswerverifiedShow Answer

Yields on money market funds are closely associated with:

Correct AnswerverifiedShow Answer

In a closed-end mutual fund,shares are traded:

Correct AnswerverifiedShow Answer

Exchange-traded funds (ETFs)are similar to index mutual funds,but they trade on stock exchanges like common stock.

Correct AnswerverifiedShow Answer

Shares of a closed-end fund trade on an exchange,just like stocks.

Correct AnswerverifiedShow Answer

On average,mutual funds tend to outperform the market over the long run.

Correct AnswerverifiedShow Answer

The prospectus is designed to provide a broad overview of the mutual fund,but is not required to disclose its investment focus or the investment style that it represents.

Correct AnswerverifiedShow Answer

Closed-end funds have a fixed number of shares;open-end funds do not.

Correct AnswerverifiedShow Answer

Money market fund rates do not closely track short-term market interest rates,because the maturities of assets held in money market portfolios generally range from one to six months.

Correct AnswerverifiedShow Answer

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