1) you pay $216,000 to the capital hedge fund, which has a price of $18 per share at the
beginning of the year. the fund deducted a front-end commission of 4%. the securities
in the fund increased in value by 15% during the year. the fund’s expense ratio is 2%
and is deducted from year-end asset values. what is your rate of return on the fund if
you sell your shares at the end of the year?
a.5.35%
b.7.23%
c.8.19%
d.10%
2) which one of the following country risks includes the possibility of expropriation of
assets, changes in tax policy, and restrictions on foreign exchange transactions?
a.default risk
b.foreign exchange risk
c.market risk
d.political risk
3) restrictions on trading involving insider information apply to:
i. corporate officers and directors
ii. major stockholders
iii. relatives of corporate directors and officers
a.i only
b.i and ii only
c.ii and iii only
d.i, ii, and iii
4) if the price of a $10,000 par treasury bond is $10,237.50, the quote would be listed in
the newspaper as ________.
a.102:10
b.102:11
c.102:12
d.102:13
5) in a particular year, lost hope mutual fund made the following investments in asset
classes:
the return on a bogey portfolio was 12%, based on the following:
the contribution of security selection within asset classes to the total extra return was
__________.
a.-1%
b.0%
c.1%
d.2%
6) assume that the federal reserve increases the money supply. this will cause:
i. interest rates to decrease
ii. consumption and investment to decrease
iii. inflation to fall
a.i only
b.i and ii only
c.ii and iii only
d.i, ii, and iii
7) the collapse of the long term capital management hedge fund in 1998 was a case of
an extremely unlikely statistical event called ________.
a.statistical arbitrage
b.an unhedged play
c.a tail event
d.a liquidity trap
8) according to the 2011 mutual fund fact book, _______ of total assets were in taxable
money market funds and _______ were tax-exempt money market funds.
a.35%; 14%
b.12.3%; 75%
c.22%; 3.9%
d.5%; 47%
9) which one of the following best describes the purpose of derivatives markets?
a.transferring risk from one party to another
b.investing for a short time period to earn a small rate of return
c.investing for retirement
d.earning interest income
10) which of the following indexes are market value-weighted?
i. the nyse composite
ii. the s&p 500
iii. the wilshire 5000
a.i and ii only
b.ii and iii only
c.i and iii only
d.i, ii, and iii
11) which of the following is not a method employed by followers of technical
analysis?
a.charting
b.relative strength analysis
c.earnings forecasting
d.trading around support and resistance levels
12) (last word) computerized inventory tracking has been credited with reducing the
number and severity of recessions because these tracking systems:
a.require firms to change prices much more quickly than before.
b.effectively eliminate negative demand shocks.
c.allow firms to react more quickly to negative demand shocks, and avoid the large
output reductions that frequently result in higher unemployment.
d.have eliminated the need for government macroeconomic policy.