Question 1

Discuss the consistency of mutual fund performance results,as studied by Goetzmann and Ibbotson (1994)and Malkiel (1995).

Accepted Answer

Goetzmann and Ibbotson found that,of mut...

Question 2

Hedge funds ______ engage in market timing ______ take extensive derivative positions.

Accepted Answer

A)   cannot;and cannot
B)   cannot;but can
C)   can;and can
D)   can;but cannot
E)   none of theseF) A) and E)
G) C) and D)

Question 3

Performance evaluation of hedge funds is complicated by _____.

Accepted Answer

A)   liquidity premiums
B)   survivorship bias
C)   unreliable market valuations of infrequently traded assets
D)   unstable risk attributes
E)   all of theseF) D) and E)
G) A) and B)

Question 4

To a taxpayer in the 34% tax bracket,a tax-free bond available at a price of 100 and a coupon rate of 10% has a taxable equivalent yield of _________.

Accepted Answer

A)   6.6%
B)   10.0%
C)   13.4%
D)   15.2%
E)   none of theseF) A) and E)
G) D) and E)

Question 5

Which one of the following is not an objective of a stock mutual fund?

Accepted Answer

A)   Maximization of capital gains.
B)   Growth.
C)   Growth and income.
D)   Income and security.
E)   None of these.F) C) and E)
G) A) and D)

Question 6

The Profitability Fund had NAV per share of $17.50 on January 1,2001.On December 31 of the same year the fund's NAV was $19.47.Income distributions were $0.75 and the fund had capital gain distributions of $1.00.Without considering taxes and transactions costs,what rate of return did an investor receive on the Profitability fund last year?

Accepted Answer

A)   11.26%
B)   15.54%
C)   16.97%
D)   21.26%
E)   9.83%F) All of the above
G) B) and D)

Question 7

Which of the following is true regarding equity mutual funds:
I.They invest primarily in stock.
II.They may hold fixed-income securities as well as stock.
III.Most hold money market securities as well as stock.
IV.Two types of equity funds are income funds and growth funds.

Accepted Answer

A)   I and IV
B)   I,III,and IV
C)   I,II,and IV
D)   I,II,and III
E)   I,II,III,and IVF) A) and C)
G) D) and E)

Question 8

A mutual fund had average daily assets of $2.0 billion in 2003.The fund sold $500 million worth of stock and purchased $700 million worth of stock during the year.The funds turnover ratio is

Accepted Answer

A)   27.5%.
B)   12%.
C)   15%.
D)   25%.
E)   20%.F) A) and B)
G) A) and E)

Question 9

When a company sets up a defined contribution pension plan,the __________ bears all the risk and the __________ receives all the return from the plan's assets.

Accepted Answer

A)   employee,employee
B)   employee,employer
C)   employer,employee
D)   employer,employer
E)   cannot tell;depends on the economic environment.F) All of the above
G) A) and E)

Question 10

A hedge fund attempting to profit from a change in the spread between mortgages and Treasuries is using a ______ strategy.

Accepted Answer

A)   market neutral
B)   directional
C)   relative value
D)   divergence
E)   convergenceF) B) and D)
G) B) and C)

Question 11

The minimum investment in some new hedge funds is as low as $______,compared to a traditional minimum of $______.

Accepted Answer

A)   50,000;500,000 to 1 million
B)   25,000;250,000 to 1 million
C)   175,000;400,000 to 1 million
D)   10,000;750,000
E)   5,000;2 millionF) A) and C)
G) None of the above

Question 12

The previous value of a portfolio that must be reattained before a hedge fund can charge incentive fees is known as a _____.

Accepted Answer

A)   benchmark
B)   water stain
C)   water mark
D)   high water mark
E)   low water markF) D) and E)
G) None of the above

Question 13

A mutual fund had NAV per share of $16.75 on January 1,2009.On December 31 of the same year the fund's rate of return for the year was 26.6%.Income distributions were $1.79 and the fund had capital gain distributions of $2.80.Without considering taxes and transactions costs,what ending NAV would you calculate?

Accepted Answer

A)   $17.44
B)   $13.28
C)   $14.96
D)   $17.25
E)   $16.62F) B) and E)
G) B) and C)

Question 14

At issue,offering prices of open-end funds will often be

Accepted Answer

A)   less than NAV due to loads and commissions.
B)   greater than NAV due to loads and commissions.
C)   less than NAV due to limited demand.
D)   greater than NAV due to excess demand.
E)   less than or greater than NAV with no apparent pattern.F) D) and E)
G) C) and D)

Question 15

Unlike mutual funds,hedge funds

Accepted Answer

A)   allow private investors to pool assets to be managed by a fund manager.
B)   are commonly organized as private partnerships.
C)   are subject to extensive SEC regulations.
D)   are typically only open to wealthy or institutional investors.
E)   B and DF) A) and C)
G) A) and B)

Question 16

Hedge funds typically ______ relative mispricing of specific securities and ______ broad market exposure.

Accepted Answer

A)   bet on;bet on
B)   hedge;hedge
C)   hedge;bet on
D)   bet on;hedge
E)   none of theseF) A) and B)
G) A) and C)

Question 17

The objectives of personal trusts normally are __________ in scope than those of individual investors and personal trust managers typically are __________ than individual investors.

Accepted Answer

A)   broader,more risk averse
B)   broader,less risk averse
C)   more limited,more risk averse
D)   more limited,less risk averse
E)   none of theseF) B) and D)
G) All of the above

Question 18

Assume newly issued 30-year-on-the-run bonds sell at higher yields (lower prices) than 29 ½ year bonds with a nearly identical duration.A hedge fund that buys 29 ½ year bonds and sells 30 year bonds is taking a _____.

Accepted Answer

A)   market neutral position
B)   conservative position
C)   bullish position
D)   bearish position
E)   none of theseF) None of the above
G) B) and C)

Question 19

Diversified Portfolios had year-end assets of $279,000,000 and liabilities of $43,000,000.If Diversified's NAV was $42.13,how many shares must have been held in the fund?

Accepted Answer

A)   43,000,000
B)   6,488,372
C)   5,601,709
D)   1,182,203
E)   None of these.F) B) and C)
G) All of the above

Question 20

Shares in hedge funds are priced

Accepted Answer

A)   at NAV
B)   a significant premium to NAV
C)   a significant discount from NAV
D)   B or C
E)   none of theseF) C) and E)
G) B) and E)

Exam 22: Mutual Fund: Objectives, Types, NAV, Turnover Ratio, and More

To a taxpayer in the 34% tax bracket,a tax-free bond available at a price of 100 and a coupon rate of 10% has a taxable equivalent yield of _________.

Correct Answer
verified

Which of the following is true regarding equity mutual funds: I.They invest primarily in stock. II.They may hold fixed-income securities as well as stock. III.Most hold money market securities as well as stock. IV.Two types of equity funds are income funds and growth funds.

Correct Answer
verified

Hedge funds typically relative mispricing of specific securities and broad market exposure.

Correct Answer
verified

Correct Answer
verified

Discuss the consistency of mutual fund performance results,as studied by Goetzmann and Ibbotson (1994)and Malkiel (1995).

Correct Answer
verified
Goetzmann and Ibbotson found that,of mut...
View Answer

The minimum investment in some new hedge funds is as low as $,compared to a traditional minimum of $.

Correct Answer
verified

At issue,offering prices of open-end funds will often be

Correct Answer
verified

Diversified Portfolios had year-end assets of $279,000,000 and liabilities of $43,000,000.If Diversified's NAV was $42.13,how many shares must have been held in the fund?

Correct Answer
verified

Shares in hedge funds are priced

Correct Answer
verified

The previous value of a portfolio that must be reattained before a hedge fund can charge incentive fees is known as a _____.

Correct Answer
verified

Correct Answer
verified

When a company sets up a defined contribution pension plan,the bears all the risk and the receives all the return from the plan's assets.

Correct Answer
verified

Which one of the following is not an objective of a stock mutual fund?

Correct Answer
verified

A hedge fund attempting to profit from a change in the spread between mortgages and Treasuries is using a ______ strategy.

Correct Answer
verified

A mutual fund had average daily assets of $2.0 billion in 2003.The fund sold $500 million worth of stock and purchased $700 million worth of stock during the year.The funds turnover ratio is

Correct Answer
verified

The objectives of personal trusts normally are in scope than those of individual investors and personal trust managers typically are than individual investors.

Correct Answer
verified

Assume newly issued 30-year-on-the-run bonds sell at higher yields (lower prices) than 29 ½ year bonds with a nearly identical duration.A hedge fund that buys 29 ½ year bonds and sells 30 year bonds is taking a _____.

Correct Answer
verified

Performance evaluation of hedge funds is complicated by _____.

Correct Answer
verified

Hedge funds engage in market timing take extensive derivative positions.

Correct Answer
verified

Unlike mutual funds,hedge funds

Correct Answer
verified

Exam 22: Mutual Fund: Objectives, Types, NAV, Turnover Ratio, and More

To a taxpayer in the 34% tax bracket,a tax-free bond available at a price of 100 and a coupon rate of 10% has a taxable equivalent yield of _________.

Correct AnswerverifiedShow Answer

Which of the following is true regarding equity mutual funds: I.They invest primarily in stock. II.They may hold fixed-income securities as well as stock. III.Most hold money market securities as well as stock. IV.Two types of equity funds are income funds and growth funds.

Correct AnswerverifiedShow Answer

Hedge funds typically ______ relative mispricing of specific securities and ______ broad market exposure.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Discuss the consistency of mutual fund performance results,as studied by Goetzmann and Ibbotson (1994)and Malkiel (1995).

Correct AnswerverifiedGoetzmann and Ibbotson found that,of mut...View AnswerShow Answer

The minimum investment in some new hedge funds is as low as $______,compared to a traditional minimum of $______.

Correct AnswerverifiedShow Answer

At issue,offering prices of open-end funds will often be

Correct AnswerverifiedShow Answer

Diversified Portfolios had year-end assets of $279,000,000 and liabilities of $43,000,000.If Diversified's NAV was $42.13,how many shares must have been held in the fund?

Correct AnswerverifiedShow Answer

Shares in hedge funds are priced

Correct AnswerverifiedShow Answer

The previous value of a portfolio that must be reattained before a hedge fund can charge incentive fees is known as a _____.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a company sets up a defined contribution pension plan,the __________ bears all the risk and the __________ receives all the return from the plan's assets.

Correct AnswerverifiedShow Answer

Which one of the following is not an objective of a stock mutual fund?

Correct AnswerverifiedShow Answer

A hedge fund attempting to profit from a change in the spread between mortgages and Treasuries is using a ______ strategy.

Correct AnswerverifiedShow Answer

A mutual fund had average daily assets of $2.0 billion in 2003.The fund sold $500 million worth of stock and purchased $700 million worth of stock during the year.The funds turnover ratio is

Correct AnswerverifiedShow Answer

The objectives of personal trusts normally are __________ in scope than those of individual investors and personal trust managers typically are __________ than individual investors.

Correct AnswerverifiedShow Answer

Assume newly issued 30-year-on-the-run bonds sell at higher yields (lower prices) than 29 ½ year bonds with a nearly identical duration.A hedge fund that buys 29 ½ year bonds and sells 30 year bonds is taking a _____.

Correct AnswerverifiedShow Answer

Performance evaluation of hedge funds is complicated by _____.

Correct AnswerverifiedShow Answer

Hedge funds ______ engage in market timing ______ take extensive derivative positions.

Correct AnswerverifiedShow Answer

Unlike mutual funds,hedge funds

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Hedge funds typically relative mispricing of specific securities and broad market exposure.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Goetzmann and Ibbotson found that,of mut...
View Answer

The minimum investment in some new hedge funds is as low as $,compared to a traditional minimum of $.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

When a company sets up a defined contribution pension plan,the bears all the risk and the receives all the return from the plan's assets.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The objectives of personal trusts normally are in scope than those of individual investors and personal trust managers typically are than individual investors.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Hedge funds engage in market timing take extensive derivative positions.

Correct Answer
verified

Correct Answer
verified