Question 1

A fund that is designed to match the performance of a measure such as the S & P 500 or the Russell 2000 is called a(n)

Accepted Answer

A)   index fund.
B)   targeted fund.
C)   sector fund.
D)   block fund.E) B) and D)
F) A) and D)

Question 2

Returns on exchange traded funds may come from
I. capital gains.
II. dividends.
III. increases in the fund's premium.
IV. decreases in the fund's discount.

Accepted Answer

A)   I and II only
B)   III and IV only
C)   I, II and III only
D)   I, II, III and IVE) All of the above
F) B) and D)

Question 3

Like ordinary stocks, exchange traded funds (ETFs) can be sold short.

Accepted Answer

A) True 
 B)False

Question 4

Most exchange-traded funds are index funds.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Which one of the following statements concerning ETFs is correct?

Accepted Answer

A)   ETFs are based solely on U.S. indexes.
B)   The ETF based on the Standard & Poor's 500 Index is priced at 1/10 the value of that index.
C)   Spiders are based on the DJIA.
D)   The ETF based on the Dow is priced at 1/10 of the value of the DJIA.E) A) and B)
F) A) and C)

Question 7

The purchase price of a closed-end mutual fund is equivalent to the net asset value of the fund.

Accepted Answer

A) True 
 B)False

Question 8

A mutual fund is generally more tax efficient when it has a ________ turnover rate and a ________ dividend yield.

Accepted Answer

A)   low; low
B)   low; high
C)   high; low
D)   high; highE) C) and D)
F) A) and C)

Question 9

Many funds advertise their returns as the amount to which $10,000 invested in the fund would have grown to over 5 or 10 years. These results assume that

Accepted Answer

A)   all dividends, interest and capital gains on a pre-tax basis are reinvested in the fund.
B)   all dividends and capital gains less a 15% deduction for taxes are reinvested in the fund.
C)   all dividends and interest are reinvested in the fund.
D)   no dividends or capital gains are reinvested in the fund.E) B) and D)
F) None of the above

Question 10

One drawback of investing in mutual funds is the

Accepted Answer

A)   annual management fee.
B)   lack of liquidity of fund shares.
C)   amount required for the initial investment.
D)   lack of information on the performance of the fund.E) C) and D)
F) A) and D)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The net asset value of a mutual fund increased from $12.03 to $13.53, but its price per share increased by only $1.26. This information indicates that the fund

Accepted Answer

A)   paid out $1 in capital gains.
B)   paid out $1 in dividends.
C)   is a closed-end fund.
D)   is an open-end fund.E) All of the above
F) C) and D)

Question 13

The net asset value is the price per share an investor will pay to acquire shares in a no-load, open-end fund.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

An open-end investment company

Accepted Answer

A)   is involved in all trades of its shares.
B)   sells shares at a discounted NAV price.
C)   trades like a stock on the exchanges.
D)   has a set number of shares.E) C) and D)
F) None of the above

Question 16

Mutual funds provide a simplified means of diversifying a portfolio.

Accepted Answer

A) True 
 B)False

Question 17

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.E) None of the above
F) A) and B)

Question 18

Information for ABC Fund is  The market-based holding period return for ABC Mutual Fund is

Accepted Answer

A)   -19.1%.
B)   -14.6%.
C)   0.3%.
D)   9.4%.E) A) and B)
F) A) and C)

Question 19

Investors should never use mutual funds to invest in areas where they would not buy individual stocks.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following accurately describe reasons for investing in mutual funds?
I. to effectively control the timing of capital gains for tax purposes
II. to achieve portfolio diversification at a reasonable cost
III. to invest in unfamiliar sectors or geographic regions
IV. to outperform the market

Accepted Answer

A)   I and IV only
B)   II and III only
C)   I, II and III only
D)   I, II, III and IVE) None of the above
F) A) and C)

Exam 12: Mutual Funds and Exchange-Traded Funds

Investors should never use mutual funds to invest in areas where they would not buy individual stocks.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Which one of the following statements concerning ETFs is correct?

Correct Answer
verified

Information for ABC Fund is The market-based holding period return for ABC Mutual Fund is

Correct Answer
verified

The net asset value of a mutual fund increased from $12.03 to $13.53, but its price per share increased by only $1.26. This information indicates that the fund

Correct Answer
verified

The net asset value is the price per share an investor will pay to acquire shares in a no-load, open-end fund.

Correct Answer
verified

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

Correct Answer
verified

The purchase price of a closed-end mutual fund is equivalent to the net asset value of the fund.

Correct Answer
verified

One drawback of investing in mutual funds is the

Correct Answer
verified

A fund that is designed to match the performance of a measure such as the S & P 500 or the Russell 2000 is called a(n)

Correct Answer
verified

Like ordinary stocks, exchange traded funds (ETFs) can be sold short.

Correct Answer
verified

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 Answer
verified

Many funds advertise their returns as the amount to which $10,000 invested in the fund would have grown to over 5 or 10 years. These results assume that

Correct Answer
verified

An open-end investment company

Correct Answer
verified

Most exchange-traded funds are index funds.

Correct Answer
verified

A mutual fund is generally more tax efficient when it has a turnover rate and a dividend yield.

Correct Answer
verified

Mutual funds provide a simplified means of diversifying a portfolio.

Correct Answer
verified

Returns on exchange traded funds may come from I. capital gains. II. dividends. III. increases in the fund's premium. IV. decreases in the fund's discount.

Correct Answer
verified

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

Correct Answer
verified

Exam 12: Mutual Funds and Exchange-Traded Funds

Investors should never use mutual funds to invest in areas where they would not buy individual stocks.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following statements concerning ETFs is correct?

Correct AnswerverifiedShow Answer

Information for ABC Fund is The market-based holding period return for ABC Mutual Fund is

Correct AnswerverifiedShow Answer

The net asset value of a mutual fund increased from $12.03 to $13.53, but its price per share increased by only $1.26. This information indicates that the fund

Correct AnswerverifiedShow Answer

The net asset value is the price per share an investor will pay to acquire shares in a no-load, open-end fund.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The purchase price of a closed-end mutual fund is equivalent to the net asset value of the fund.

Correct AnswerverifiedShow Answer

One drawback of investing in mutual funds is the

Correct AnswerverifiedShow Answer

A fund that is designed to match the performance of a measure such as the S & P 500 or the Russell 2000 is called a(n)

Correct AnswerverifiedShow Answer

Like ordinary stocks, exchange traded funds (ETFs) can be sold short.

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

Many funds advertise their returns as the amount to which $10,000 invested in the fund would have grown to over 5 or 10 years. These results assume that

Correct AnswerverifiedShow Answer

An open-end investment company

Correct AnswerverifiedShow Answer

Most exchange-traded funds are index funds.

Correct AnswerverifiedShow Answer

A mutual fund is generally more tax efficient when it has a ________ turnover rate and a ________ dividend yield.

Correct AnswerverifiedShow Answer

Mutual funds provide a simplified means of diversifying a portfolio.

Correct AnswerverifiedShow Answer

Returns on exchange traded funds may come from I. capital gains. II. dividends. III. increases in the fund's premium. IV. decreases in the fund's discount.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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A mutual fund is generally more tax efficient when it has a turnover rate and a dividend yield.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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