Question 1

To purchase an outstanding share of a Closed End Investment Company you would pay

Accepted Answer

A)   the price determined in the secondary market.
B)   a discount from the NAV.
C)   par.
D)   the NAV.E) C) and D)
F) All of the above

Question 2

The type of account at a brokerage firm that involves the broker providing financial planning, investment management, and securities trading is the ____ account where all fees are combined into one annual fee.

Accepted Answer

A)   margin
B)   market
C)   trust
D)   wrapE) None of the above
F) All of the above

Question 3

If a closed-end fund share sells at a constant 20% discount, its dividend yield compared to a comparable open-end share will be

Accepted Answer

A)   the same.
B)   higher.
C)   higher or lower depending on NAV.
D)   lower.E) B) and C)
F) B) and D)

Question 4

The price you would pay for a share of a No-Load Fund is

Accepted Answer

A)   NAV plus 8.5%.
B)   NAV.
C)   determined by the secondary market.
D)   NAV plus 2%.E) A) and B)
F) A) and C)

Question 5

Studies show that for a typical fund that the percentage of variation of its excess return associated with variation in the S and P 500 is

Accepted Answer

A)   99%.
B)   60%.
C)   40%.
D)   75%.E) A) and B)
F) None of the above

Question 6

An investor signs a contract to invest $1,000 per year for 10 years. There is an 8.5% load charge. During the first year, the Mutual Fund must invest at least

Accepted Answer

A)   $500.
B)   $850.
C)   $250.
D)   $150.E) A) and D)
F) All of the above

Question 7

Investment companies have been defined and controlled since

Accepted Answer

A)   1940.
B)   1908.
C)   1972.
D)   1933E) B) and C)
F) A) and B)

Question 8

An investment company share's NAV changes as frequently as

Accepted Answer

A)   monthly.
B)   daily.
C)   quarterly.
D)   annually.E) None of the above
F) A) and D)

Question 9

A _____ is an investment company that owns a fixed set of securities for the life of the company.

Accepted Answer

A)   closed-end investment company
B)   unit investment trust
C)   open-end investment company
D)   managed investment companyE) A) and C)
F) B) and C) B

Question 10

An investor pays $15 for a share of a fund, and there is a $1.20 load charge. The manager's performance will be measured based on an investment of

Accepted Answer

A)   $14.90.
B)   $15.10.
C)   $13.80.
D)   $16.20.E) A) and B)
F) A) and C)

Question 11

What is probably the most important factor to consider in selecting an investment company?

Accepted Answer

A)   its investment policy
B)   its board of directors
C)   its historical record of performance
D)   its historical financial statementsE) B) and D)
F) C) and D)

Question 12

A listing for a Money Market Mutual Fund does not show

Accepted Answer

A)   average maturity.
B)   default risk.
C)   compound annual yield based on last 7 days.
D)   assets.E) A) and B)
F) A) and C) B

Question 13

The relationship between the abnormal returns for mutual funds and the operating expense ratio may be characterized as

Accepted Answer

A)   strongly positive
B)   strongly negative
C)   weakly positive
D)   weakly negativeE) B) and D)
F) B) and C)

Question 14

The percentage of an investment company's assets that are used to pay for management fees, administrative expenses, and other operating expenses in a given year is known as the ____ ratio.

Accepted Answer

A)   current
B)   quick
C)   unit investment
D)   operating-expenseE) All of the above
F) A) and C)

Question 15

The firm that prepares the Mutual Fund Indexes reported in Barron's is

Accepted Answer

A)   Wall Street Journal.
B)   Standard and Poor's.
C)   Fitch.
D)   Lipper.E) C) and D)
F) B) and D)

Question 16

Which one of the following is the most common form of unit investment trust found in the United States?

Accepted Answer

A)   the money market
B)   convertible bond
C)   stock unit
D)   bond unitE) A) and B)
F) C) and D)

Question 17

The difference between the average return on the portfolio and the average return on a benchmark portfolio is known as the

Accepted Answer

A)   ex ante alpha
B)   ex post alpha
C)   market beta
D)   fund betaE) C) and D)
F) A) and C)

Question 18

A fee charged by a mutual fund to its shareholders if they sell their shares within a specified time after initially purchasing them is known as the

Accepted Answer

A)   contingent deferred sales charge
B)   redemption fee
C)   distribution fee
D)   deferred load chargeE) B) and D)
F) B) and C)

Question 19

The term Mutual Fund is typically used for a

Accepted Answer

A)   Closed End Investment Company.
B)   Managed Investment Company.
C)   Real Estate Investment Trust.
D)   Open End Investment Company.E) All of the above
F) B) and C) D

Question 20

What will determine the size of transaction costs in an investment company?

Accepted Answer

A)   the amount of commission charged
B)   the amount of turnover in an investment company's portfolio
C)   they are minimal and therefore immaterial
D)   past performanceE) A) and D)
F) B) and D)

Exam 23: Investment Companies

To purchase an outstanding share of a Closed End Investment Company you would pay

Correct AnswerverifiedShow Answer

The type of account at a brokerage firm that involves the broker providing financial planning, investment management, and securities trading is the ____ account where all fees are combined into one annual fee.

Correct AnswerverifiedShow Answer

If a closed-end fund share sells at a constant 20% discount, its dividend yield compared to a comparable open-end share will be

Correct AnswerverifiedShow Answer

The price you would pay for a share of a No-Load Fund is

Correct AnswerverifiedShow Answer

Studies show that for a typical fund that the percentage of variation of its excess return associated with variation in the S and P 500 is

Correct AnswerverifiedShow Answer

An investor signs a contract to invest $1,000 per year for 10 years. There is an 8.5% load charge. During the first year, the Mutual Fund must invest at least

Correct AnswerverifiedShow Answer

Investment companies have been defined and controlled since

Correct AnswerverifiedShow Answer

An investment company share's NAV changes as frequently as

Correct AnswerverifiedShow Answer

A _____ is an investment company that owns a fixed set of securities for the life of the company.

Correct AnswerverifiedB

An investor pays $15 for a share of a fund, and there is a $1.20 load charge. The manager's performance will be measured based on an investment of

Correct AnswerverifiedShow Answer

What is probably the most important factor to consider in selecting an investment company?

Correct AnswerverifiedShow Answer

A listing for a Money Market Mutual Fund does not show

Correct AnswerverifiedB

The relationship between the abnormal returns for mutual funds and the operating expense ratio may be characterized as

Correct AnswerverifiedShow Answer

The percentage of an investment company's assets that are used to pay for management fees, administrative expenses, and other operating expenses in a given year is known as the ____ ratio.

Correct AnswerverifiedShow Answer

The firm that prepares the Mutual Fund Indexes reported in Barron's is

Correct AnswerverifiedShow Answer

Which one of the following is the most common form of unit investment trust found in the United States?

Correct AnswerverifiedShow Answer

The difference between the average return on the portfolio and the average return on a benchmark portfolio is known as the

Correct AnswerverifiedShow Answer

A fee charged by a mutual fund to its shareholders if they sell their shares within a specified time after initially purchasing them is known as the

Correct AnswerverifiedShow Answer

The term Mutual Fund is typically used for a

Correct AnswerverifiedD

What will determine the size of transaction costs in an investment company?

Correct AnswerverifiedShow Answer

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B

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B

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D

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