13
Exhibit 17-1
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Suppose ABC Mutual fund owned only 4 stocks as follows:
Stock
Shares
Price
W
2500
$11
X
2100
14
Y
2700
23
Z
1900
15
42. Refer to Exhibit 17-1. The fund originated by selling $100,000 of stock at $10.00 per share. What is its
current NAV?
a.
$1.47
b.
$14.75
c.
$16.03
d.
$27.62
e.
$234.12
Stock
X
Y
43. Refer to Exhibit 17-1. What is the offering price for the fund if the NAV is $25.25 and a the load is
6%?
a.
$26.19
b.
$23.74
c.
$25.25
d.
$26.77
e.
$24.13
14
44. Suppose Mega Mutual Fund owns only the 4 stocks shown below with no liabilities.
Stock
Shares
Price
A
1800
15
B
2200
11
C
2300
9
D
1900
18
The fund originated by selling $300,000 of stock at $30.00 per share. What is its current NAV?
a.
$106.10
b.
$12.94
c.
$129.40
d.
$10.61
e.
None of the above.
Stock
Shares
Price
A
1800
15
B
2200
11
C
2300
D
1900
18
45. Suppose Under Mutual Fund owns only the 3 stocks shown below with no liabilities.
Stock
Shares
Price
A
2900
15
B
3100
14
C
3200
12
The fund originated by selling $500,000 of stock at $50.00 per share. What is its current NAV?
a.
$12.53
b.
$15.29
c.
$152.90
d.
$125.30
e.
None of the above.
46. Suppose you consider investing $1,000 in a load fund which charges a fee of 2%, and you expect the
fund to earn 14% over the next year. Alternatively, you could invest in a no-load fund with similar risk
that is expected to earn 9% and charges a 1/2% redemption fee. Which is better and by how much?
a.
Funds are equal
b.
Load fund by $32.65
c.
Load fund by $50.55
d.
No-load fund by $64.55
e.
No-load fund by $44.30
47. Suppose you consider investing $1,000 in a load fund which charges a fee of 2%, and you expect the
fund to earn 11% over the next year. Alternatively, you could invest in a no-load fund with similar risk
that is expected to earn 7% and charges a 1/2% redemption fee. Which is better and by how much?
a.
Funds are equal
b.
No-load fund by $36.98
c.
Load fund by $45.25
d.
Load fund by $23.15
e.
No-load fund by $15.52
16
48. Suppose you consider investing $15,000 in a load fund from which a fee of 5% is deducted and you
expect the fund to earn 12% over the next year. Alternatively, you could invest in a no load fund which
is expected to earn 10% and which takes a 1/2% redemption fee. Which is better and by how much?
a.
Load fund by $318.45
b.
No load fund by $457.50
c.
Funds are equal
d.
Load fund by $415.10
e.
No load fund by $211.51
49. Suppose you consider investing $10,000 in a load fund from which a fee of 3% is deducted and you
expect the fund to earn 12% over the next year. Alternatively, you could invest in a no load fund which
is expected to earn 10% and which takes a 0% redemption fee. Which is better and by how much?
a.
Load fund by $151
b.
No load fund by $136
c.
Funds are equal
d.
No load fund by $421
e.
Load fund by $115
50. Suppose you consider investing $5,000 in a load fund from which a fee of 8% is deducted and you
expect the fund to earn 12% over the next year. Alternatively, you could invest in a no load fund which
is expected to earn 10% and which takes a 1/2% redemption fee. Which is better and by how much?
a.
Load fund by $320.50
b.
Load fund by $575.50
c.
Funds are equal
d.
No load fund by $320.50
e.
No load fund by $575.50
51. On January 2, 2007, you invest $10,000 in Megabucks Mutual Fund, a load fund that charges a fee of
2%. The fund’s returns were 13% in 2007, 11% in 2008, and 8% in 2009. On December 31, 2009, you
redeem all your shares. The dollar value is
a.
$13,600.00
b.
$13,275.51
c.
$13,297.67
d.
$13,995.75
e.
$10,000.00
52. On January 2, 2007, you invest $50,000 in the Lizbiz Mutual Fund, a load fund that charges a fee of
5%. The fund’s returns were 14.6% in 2007, −6.4% in 2008, 15.2% in 2009. On December 31, 2009,
you redeem all your shares. The dollar value is
a.
$66,722.27
b.
$15,200.00
c.
$58,695.74
d.
$33,366.25
e.
$10,000.00
53. On January 2, 2007, you invest $100,000 in the Jeffers Mutual Fund, a load fund that charges a fee of
5%. The fund’s returns were −14.6% in 2007, −6.4% in 2008, 35% in 2009. On December 31, 2009,
you redeem all your shares. The dollar value is:
a.
$95,600.57
b.
$102,515.90
c.
$83,297.75
d.
$133,995.75
e.
$100,000.00
18
54. On January 2, 2007, you invest $10,000 in the Tiger Fund, a load fund that charges a fee of 6%. The
fund’s returns were 25% in 2007, 35% in 2008, −5% in 2009. On December 31, 2009, you redeem all
your shares of Tiger. The dollar value is
a.
$5,200.89
b.
$13,345.89
c.
$7,931.25
d.
$15,896.34
e.
$8,646.91
55. On January 2, 2007, you invest $10,000 in the W.O.W. Mutual Fund, a load fund that charges a fee of
5%. The fund’s returns were 13.6% in 2007, 12.2% in 2008, 8.3% in 2009. On December 31, 2009,
you redeem all your W.O.W. shares. The dollar value is
a.
$13,600.00
b.
$13,664.13
c.
$10,000.00
d.
$131,136.40
e.
$13,113.64
56. On January 2, 2007, you invest $10,000 in the Dog Mutual Fund, a load fund that charges a fee of 7%.
The fund’s returns were 12.8% in 2007, 13.9% in 2008, 7.9% in 2009. On December 31, 2009, you
redeem all your shares. The dollar value is
a.
$12,800.00
b.
$12,892.50
c.
$100,000.00
d.
$128,925.00
e.
$10,000.00
19
57. On January 2, 2007, you invest $50,000 in A Mutual Fund, a load fund that charges a fee of 7%. The
fund’s returns were 12.8% in 2007, 13.9% in 2008, and 7.9% in 2009. On December 31, 2009, you
redeem all your shares in A. The dollar value is
a.
$64,462.57
b.
$644,625.70
c.
$50,000.00
d.
$6,446.25
e.
$10,000.00
58. On January 2, 2007, you invest $100,000 in Righteous, a load fund that charges a fee of 7%. The
fund’s returns were 12.8% in 2007, 13.9% in 2008, and 7.9% in 2009. On December 31, 2009, you
redeem all your Righteous shares. The dollar value is
a.
$12,800.00
b.
$12,892.50
c.
$100,000.00
d.
$128,925.00
e.
$10,000.00
59. Consider the Defiance Bond Fund that consists of the 3 bonds shown below and has no liabilities.
Company
Current Bond Value
# Bonds
Komko
980
120
Hijack
1010
150
Mitsue
1200
100
If initially the value of the fund was $250,000 and the original shares were offered to the public with a
NAV of $25 per share, what is the current NAV of the fund?
a.
$25.00
b.
$38.91
c.
$39.81
d.
$31.98
e.
$39.91
20
60. Consider X Bond Fund which consists of the 5 bonds shown below with no liabilities.
Company
Current Bond Value
# Bonds
Komko
980
120
Hijack
1010
150
Mitsue
1200
100
Smitsu
800
120
Jones
600
150
If initially the value of the fund was $1,000,000 and the original shares were offered to the public with
a NAV of $25 per share, what is the current NAV of the fund?
a.
$25.00
b.
$27.68
c.
$25.68
d.
$28.76
e.
$26.78
61. Consider the Compliance Bond Fund that consists of the 7 bonds shown below and has no liabilities.
Company
Current Bond Value
# Bonds
Komko
980
120
Hijack
1010
150
Mitsue
1200
100
Smitsu
800
120
Jones
600
150
GMM
1000
150
ATP
950
150
If initially the value of the fund was $2,500,000 and the original shares were offered to the public with
a NAV of $25 per share, what is the current NAV of the fund?
a.
$27.11
b.
$25.00
c.
$26.11
d.
$21.67
e.
$26.27
21
62. Given the following fees and expected returns for fund X, assuming an initial investment of $1000
calculate the value of the investment at the end of 5 years.
Investment
E(Return)
Load
fee
Rear-end load
Years
X
10%
2.5%
0.25%
0%
5 years
a.
$1069.82
b.
$1550.77
c.
$1042.36
d.
$1689.95
e.
$1389.95
63. Given the following fees and expected returns for fund Y, assuming an initial investment of $1000
calculate the value of the investment at the end of 5 years.
Investment
E(Return)
Load
fee
Rear-end load
Years
Y
8%
0%
0.50%
3%
5 years
a.
$1069.82
b.
$1550.77
c.
$1642.36
d.
$1389.95
e.
$1362.59
64. Calculate the annual rate of return for a mutual fund with the following fees and expected returns.
Investment
E(Return)
Load
fee
Years Held
Mutual Fund
7%
4%
0.50%
7 years
a.
4.95%
b.
5.0%
c.
5.85%
d.
2.5%
e.
6.55%
22
65. If the Micro mutual fund was originated by selling $250,000 of stock at $10.00 per share, calculate its
current NAV if the fund consists of the following four stocks.
Stock
Shares
Price
Q
9,500
$10.75
R
7,200
$13.90
S
4,500
$22.25
T
6,800
$14.75
a.
$5.78
b.
$10.00
c.
$12.43
d.
$16.11
e.
$19.21
66. What is the offering price for a mutual fund with a NAV of $22.50 and a load of 5%?
a.
$21.38
b.
$21.79
c.
$22.50
d.
$23.63
e.
$27.50
23
67. You are considering investing $50,000 in two mutual funds. The first fund is a load fund with a fee of
6% and you expect the fund to earn 11% over the next year. Alternatively, you could invest in a no
load fund that is expected to earn 8% and has a 0.5% redemption fee. What fund has a higher return
and how much more value will it have after the first year?
a.
Load fund by $1,360
b.
Load fund by $580
c.
No load fund by $580
d.
No load fund by $1,560
e.
No load fund by $1,820
68. On January 1, 2007, you invest $20,000 in Libby Mutual Fund, a load fund that charges a fee of 2.5%.
The fund’s returns were 9% in 2007, 8% in 2008, and 3% in 2009. If you redeem all your shares on
December 31, 2009, what is the dollar value?
a.
$24,250.32
b.
$24,000.32
c.
$23,644.06
d.
$23,195.17
e.
$21,501.80