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Exam 4: Mutual Funds and Other Investment Companies

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Question 21

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Which one of the following invests in a portfolio that is fixed for the life of the fund?

A) Mutual fund
B) Money market fund
C) Managed investment company
D) Unit investment trust

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Question 22

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The difference between balanced funds and asset allocation funds is that _____.

A) balanced funds invest in bonds while asset allocation funds do not
B) asset allocation funds invest in bonds while balanced funds do not
C) balanced funds have relatively stable proportions of stocks and bonds while the proportions may vary dramatically for asset allocation funds
D) balanced funds make no capital gains distributions and asset allocation funds make both dividend and capital gains distributions

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Question 23

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

The commission,or front-end load,paid when you purchase shares in mutual funds,may not exceed __________.

Specialized sector funds concentrate their investments in _________________.

You are considering investing in a no load mutual fund with an annual expense ratio of 0.6% and an annual 12b-1 fee of 0.75%.You could also invest in a bank CD paying 6.5% per year.What minimum annual rate of return must the fund earn to make you better off in the fund than in the CD?

Most real estate investment trusts (REITs) have a debt ratio of around _________.

______________________ are often called mutual funds.

Consider a no-load mutual fund with $200 million in assets and 10 million shares at the start of the year,and $250 million in assets and 11 million shares at the end of the year.During the year investors have received income distributions of $2 per share,and capital gains distributions of $0.25 per share.Assuming that the fund carries no debt,and that the total expense ratio is 1%,what is the rate of return on the fund?

Assume that you have recently purchased 100 shares in an investment company.Upon examining the balance sheet,you note the firm is reporting $225 million in assets,$30 million in liabilities,and 10 million shares outstanding.What is the Net Asset Value (NAV) of these shares?

Which one of the following statements about returns reported by mutual funds is not correct?

Mutual funds that hold both equities and fixed-income securities in relatively stable proportions are called ____________________.

Harold has just taken his company public and owns a large quantity of restricted stock.For purposes of diversification,what fund might he help create in order to diversify his holdings?

From 1971 to 2007 the average return on the Wilshire 5000 index was _________ the return of the average mutual fund.

You invest in a mutual fund that charges a 3% front end load,1% total annual fees,and a 0% back end load on Class A shares.The same fund charges 0% front end load,1% total annual fees,and a 2% back end load on Class B shares.What are the total fees in year one on a Class A investment of $20,000 with no growth in value?

A __________ is a private investment pool open only to wealthy or institutional investors that is exempt from SEC regulation and can therefore pursue more speculative policies than mutual funds.

Assume that you have just purchased some shares in an investment company reporting $500 million in assets,$50 million in liabilities,and 50 million shares outstanding.What is the Net Asset Value (NAV) of these shares?

Which of the following is not a type of real estate investment trust? I.Equity trust II.Debt trust III.Mortgage trust IV.Unit trust

A mutual fund has total assets outstanding of $69 million.During the year the fund bought and sold assets equal to $17.25 million.This fund's turnover rate was _____.

The type of mutual fund that primarily engages in market timing is called a/an _______.