Exam 1 practice questions fin 420

ETS generally offer which of these 1. Tax efficiency. 2. Low expense ratios. 3. professional active management. 4. Marketability

1,2,4

US treasury bills are issued with all the following maturities, except

39 weeks

And investor is interested in buying a stock today for $25 the stock is currently trading at $25.50. What is the best type of order to place

De order

Which is not considered a hybrid fund

Equity income fund

Which statement regarding critical factors in selecting funds for an investor is not true

Fund managers are not allowed flexibility in managing portfolios and rarely stray from their investment strategy

Choose the risk that is attributable to cash and cash equivalents

Purchasing power risk

What is the appropriate action to take when considering investing into a fun with a high expense ratio?

The performance of the fun should be reviewed to see if the return justifies the high expense ratio

Which of the following is considered to be both liquid and marketable

US treasury bills

an investor owns an investment that is an unmanaged portfolio in which the money manager initially selects the securities to be included in the portfolio and then holds those securities until they mature or the investment portfolio terminates. this statement best describes which type of investment

Unit investment trust

And investor wants the maximum return on equities and is willing to take on maximum risk. The investor is comfortable with exposure to small companies in the US and emerging growth companies. The investor is seeking to beat the return of an index. Which function of the investor consider.

aggressive growth funds

identify the features of US treasury bills 1. US treasury bills are default risk free. 2. The 90 day T-bill rate is frequently used as the risk free rate of return in the capital asset pricing model. 3. US treasury bills offer a low rate of return when compared to riskier alternatives. 4. T-bills offer a high degree of marketability.

all

All the following correctly, describe disadvantages of cash and cash equivalents except

an investor may quickly convert a money market deposit account to cash to meet short-term needs

and investor is seeking to conserve principal, pay current income, promote long-term growth. Which fund is most appropriate

balanced fund

which of the following statements regarding certificates of deposit (CDs) is correct 1. CDs are deposits made with a bank or savings and loan for a specified period, commonly one month to five years 2. Negotiable CDs are deposits of $100,000 or more placed with commercial banks at a specified interest rate for a term of up to one year.

both

A couple in their early 30s has been married for four years. They're disposable income is relatively high and they are planning to buy a condo. If they need a safe place to invest their down payment for six months which of the following mutual funds is the most suitable for these clients.

cash reserves money market fund

Which type of bond fund will contain bonds with 5 to 10 year maturities

intermediate term

And investors only interested in investing in the stock of companies with at least $50 billion market capitalization and provide some income. Which type of function of the investor consider.

large caps stock funds

if a portfolio has t-bills, CDs and repurchase agreements in it, what type of investment is it?

money market mutual fund

If ABC Fund pays regular cash flows to investors, offers a high degree of safety of principal, and appeals especially to investors in the higher tax bracket ABC is a

municipal bond fund

All of these statements correctly identifies a separately managed account except

separately managed account is an account that holds each share of stock in a separate account; investor's sometimes have at least a dozen accounts with one share in each one

All the following types of securities contribute to more risk and should be reviewed in a fund prospectus, except

treasury securities