46) Renee wants to invest in a bond fund. She is a very conservative investor with a high
marginal tax rate. Which one of the following types of bond funds might be most suited for her
situation?
A) high-yield corporate
B) long-term world
C) short-term municipal
D) single-state corporate
E) mortgage
47) Jack has managed to save $1,000 and wants to start investing. The financial markets make
him nervous as he has very limited financial resources. Which one of the following types of
funds is probably best for Jack at this time?
A) sector
B) aggressive growth
C) social conscience
D) high yield
E) balanced
48) Which one of the following types of funds invests in both stocks and bonds and actively
attempts to time the market?
A) income
B) convertible
C) flexible portfolio
D) balanced
E) insured
49) Which one of the following types of funds is most apt to invest in preferred stocks?
A) income
B) balanced
C) world
D) insured
E) index
50) Besides size, how else does a mutual fund style box classify equity funds?
A) cost and fees as a percent of NAV
B) taxability at federal, state, and local levels
C) value versus growth characteristics
D) age of the fund
E) short and long-term rates of return
51) Letter grades are most frequently assigned to mutual funds based on the fund’s:
A) projected future returns.
B) historical rates of return.
C) management style.
D) portfolio size.
E) investment objective.
52) Trading symbols for mutual funds end in which letter?
A) M
B) F
C) X
D) Z
E) Q
53) While reviewing mutual fund reports, Allen noticed that a fund was reported as “closed”.
What is the primary reason for closing a fund?
A) all issued shares have been sold
B) the fund is suffering a loss
C) the NAV has declined noticeably
D) the fund has grown too large in size
E) the fund is underperforming its peers
54) You recently purchased a fund at a price of $39.97 per share. The NAV at the time of
purchase was $40.67. You must have purchased a(n) ________ fund.
A) closed-end
B) global
C) bond
D) index
E) asset allocation
55) Which one of the following is a common characteristic of a closed-end fund but not of an
open-end fund?
A) professional management
B) annual fees
C) stated objective
D) discounted price
E) taxable distributions
56) If you purchase shares in a closed-end fund at the initial offer price, you should expect to:
A) earn an abnormally high rate of return the first year.
B) immediately see a decrease in the value of your investment.
C) receive offers to purchase your shares at a premium prior to the official first day of trading.
D) earn tax-advantaged income.
E) realize a capital gain if you sell your shares as soon as trading in the shares commences.
57) Which one of the following trading symbols is associated with the ETF on the S&P 500
index?
A) DIA
B) QQQQ
C) SPY
D) SPX
E) DIAX
58) An ETF is best described as:
A) an index fund that trades like a closed-end fund.
B) a closed-end fund that trades like a stock.
C) a sector fund that trades like a bond.
D) an index fund that trades only at the end of each day.
E) an international fund that trades like a domestic stock.
59) Which of the following can you do with an ETF that you cannot do with an open-end fund?
I. sell at mid-day prices
II. short sell
III. buy options on them
IV. resell
A) I and III only
B) II and III only
C) III and IV only
D) I, II, and III only
E) I, II, III, and IV
60) Exchange traded notes were first created to mimic ________ index.
A) the S&P 500
B) a commodity
C) the dollar
D) the Indian stock market
E) the DJIA
61) Which one of the following statements is true?
A) An ETN shareholder owns a fractional ownership of the trust shares.
B) You can establish long, but not short, positions in ETNs.
C) ETNs invest only in commodities.
D) An ETN is an unsecured debt.
E) ETN is just another name for an ETF.
62) ETFs are:
A) limited to diversified index funds.
B) generally held until they mature.
C) sponsored primarily by large investment banks.
D) based on market-cap-weighted indexes only.
E) claims on shares held in a trust.
63) Which one of the following correctly applies to hedge funds?
A) highly liquid
B) must be highly diversified
C) available to the general public
D) vast array of investment objectives
E) limited investment options
64) Which of the following will exempt a hedge fund from registering with the SEC?
A) offering shares to the general public
B) being in existence for more than two years
C) limiting sales to individual investors
D) locking up investor’s money for at least two years
E) exceeding $25 million in assets
65) A hedge fund may charge a special performance fee which commonly ranges from:
A) 10 to 15 percent of NAV.
B) 15 to 20 percent of the fund’s profits.
C) 20 to 30 percent of NAV.
D) 20 to 40 percent of the market price.
E) 20 to 40 percent of the fund’s profits.
66) Currently, the term “hedge fund” refers to:
A) any registered fund with a stated investment objective.
B) any unregistered fund pursuing any type of investment style.
C) any fund that equally invests in long and short positions.
D) any fund that adheres to a “market-neutral” investment strategy.
E) any private fund that has a minimum investment requirement of $1 million or more.
67) A hedge fund:
A) may charge relatively high fees.
B) must be registered if there are ten or more investors.
C) is generally structured as a corporation.
D) is limited to $1 million in assets.
E) is fairly complicated to legally establish.
68) The Blue Star Fund has assets with a market value of $10.6 million and liabilities of
$607,000. What is the net asset value if there are 185,000 shares outstanding?
A) $54.02
B) $55.00
C) $56.67
D) $57.18
E) $58.25
69) The Latest Trend Fund has $2,648,900 in assets, and $1,878,400 in liabilities. How many
shares are outstanding if the NAV is $10.07?
A) $75,481
B) $76,514
C) $77,089
D) $79,142
E) $79,638
70) A mutual fund has an NAV of $10.25 with 252,000 shares outstanding. What is the value of
the fund’s assets if it has $340,500 in liabilities?
A) $2,844,537
B) $2,923,500
C) $3,055,380
D) $3,187,019
E) $3,267,337
71) The Atlas Mutual Fund owns the following stocks:
Stock
Shares
Stock Price
X
2,600
$48
Y
3,800
$69
Z
1,900
$26
The fund has no liabilities and has 65,000 shares outstanding. What is the NAV?
A) $6.32
B) $6.57
C) $6.71
D) $7.08
E) $7.19
72) The Market Stability Fund owns the following stocks:
Stock
Shares
Price
A
8,790
$49
B
6,700
$39
C
4,200
$55
The fund has no liabilities and has 57,600 shares outstanding. What is the NAV?
A) $14.72
B) $14.88
C) $15.47
D) $15.95
E) $16.02
73) At the beginning of the year, you invested $5,000 in a no-load mutual fund with a NAV of
$25.00. At the end of the year, the fund distributed $1.10 per share in short-term earnings and
$3.10 per share in long-term earnings. The end of year NAV was $24.60. What was your annual
rate of return on this investment?
A) -5.90 percent
B) -1.86 percent
C) 11.80 percent
D) 15.20 percent
E) 17.90 percent
74) You invested $9,000 in a mutual fund when the offering price was $31.50 and the NAV was
$30.20. This purchase was made one year ago today. Today, the fund distributed a total of $1.55
in long-term gains and $0.85 in short-term gains. The current offering price is $33.42 and the
NAV is $32.08. What is your return for the year?
A) 4.35 percent
B) 6.37 percent
C) 7.58 percent
D) 9.46 percent
E) 10.80 percent
75) One year ago, you purchased 421 shares of a mutual fund when both the offering price and
the NAV were $10.80 a share. Today, the NAV is $10.64 after today’s distribution of $1.48 per
share in short-term gains. There is no long-term gain distribution. What is your rate of return?
A) 10.99 percent
B) 12.04 percent
C) 12.22 percent
D) 14.29 percent
E) 14.41 percent
76) One year ago, you purchased $8,000 worth of a mutual fund at an offering price of $41.40 a
share. Today, the fund distributed $0.20 per share in short-term gains and $1.04 per share in
long-term gains. The current offering price is $46.60. The fund has a front-end load of 5 percent
and total annual operating expenses of 1.25 percent. What is your rate of return on this
investment?
A) 2.87 percent
B) 3.54 percent
C) 6.06 percent
D) 7.48 percent
E) 9.93 percent
77) The Stone Wall Fund has an offer price of $32.90 and a front-end load of 3.25 percent. What
is the net asset value?
A) $31.68
B) $31.75
C) $31.83
D) $32.90
E) $34.05
78) The European Growth Fund has $820 million in assets and $76,000 in liabilities. There are
30.5 million shares outstanding. The fund charges a 4.4 percent front-end load. What is the
offering price?
A) $26.08
B) $26.47
C) $27.54
D) $28.12
E) $29.74