Investments, Chapter 4

Money market funds

As of 2009, which class of mutual funds had the largest amount of assets invested?

greater than NAV due to loads and commissions.

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

Jargon has always been an open-end fund and will remain an open-end fund.

Jargon Rapid Growth is a mutual fund that has traditionally accepted funds from new investors and issued new shares at net asset value. Jeremy Jargon manages the fund himself and has become concerned that its level of assets has become too high for his management abilities. He issues a statement that Jargon will no longer accept funds from new investors, but will continue to accept additional investments from current shareholders. Which of the following is true about Jargon Rapid Growth fund?

front-end loads, back-end loads, and 12b-1 charges.

Management fees and other expenses of mutual funds may include

do not generally outperform the market.

Most actively managed mutual funds, when compared to a market index such as the Wilshire 5000,

DIA

Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the Dow Jones Industrials should choose

EWQ.

Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the MSCI France Index should choose

EWJ

Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the MSCI Japan Index should choose

QQQQ

Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the Nasdaq 100 should choose

IWM

Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the Russell 2000 should choose

SPY

Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the S&P 500 should choose

VTI

Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the Wilshire 5000 should choose

international funds.

Of the following types of mutual funds, an investor that wishes to invest in a diversified portfolio of foreign stocks (excluding the U.S.) should choose

global funds.

Of the following types of mutual funds, an investor that wishes to invest in a diversified portfolio of stocks worldwide (including the U.S.) should choose

unit investment trusts.

Pools of money invested in a portfolio that is fixed for the life of the fund are called

12b-1 fee.

The fee that mutual funds use to help pay for advertising and promotional literature is called a

Most are invested in fixed-income portfolios, The sponsor pools securities, then sells public shares in the trust, The portfolio is fixed for the life of the fund.

Which of the following characteristics apply to unit investment trusts?

Record keeping and administration, diversification and divisibility, professional management, and lower transaction costs

Which of the following functions do investment companies perform for their investors?

They treat income as & "passed through" to the investor for tax purposes.

Which of the following is not an advantage of mutual funds?

They invest primarily in stock, They may hold fixed-income securities as well as stock, Most hold money market securities as well as stock, Two types of equity funds are income funds and growth funds.

Which of the following is true regarding equity mutual funds?

They invest in commercial paper, CDs, and repurchase agreements and usually offer check-writing privileges.

Which of the following statements about Money Market Mutual Funds is true?

REITs invest in real estate or loans secured by real estate and raise capital by borrowing from banks and issuing mortgages.

Which of the following statements about Real Estate Investment Trusts is true?

REITs may be equity trusts or mortgage trusts, are usually highly leveraged, and are similar to closed-end funds.

Which of the following statements about Real Estate Investment Trusts is true?

An increase in the value of one of the fund's stocks

Which of the following would increase the net asset value of a mutual fund share, assuming all other things remain unchanged?

The funds redeem shares at their NAV.

Which one of the following statements regarding closed-end mutual funds is false?

The funds offer investors a guaranteed rate of return.

Which one of the following statements regarding open-end mutual funds is false?

hedge funds are only subject to minimal SEC regulation, are typically open only to wealthy or institutional investors, fund managers can pursue strategies not available to mutual funds such as short selling, heavy use of derivatives, and leverage, and are commonly structured as private partnerships.

Differences between hedge funds and mutual funds are that

39.9%

In 2009 the proportion of mutual funds (based on total assets) specializing in money market securities was

sell their shares through a broker.

Investors in closed-end funds who wish to liquidate their positions must

premium, discount

Closed end funds are frequently issued at a ______ to NAV and subsequently trade at a __________ to NAV.

partnerships of investors that pool their funds, which are then managed for a fee.

Commingled funds are

5.2%

In 2009 the proportion of hybrid (bond and stock) mutual funds (based on total assets) was

16.3%

In 2009 the proportion of mutual funds (based on total assets) specializing in bonds was

38.6%

In 2009 the proportion of mutual funds (based on total assets) specializing in common stocks was