Question 1

Unlisted investments are often called ________.

Accepted Answer

A)  Unit investment trusts
B)  Open-end funds
C)  Closed-end funds
D)  REITsE) A) and B)
F) B) and C)

Question 2

The investment philosophy of ETFs is ________.

Accepted Answer

A)  pro-active management
B)  demi-active management
C)  passive management
D)  active managementE) B) and D)
F) B) and C)

Question 3

Life-cycle funds are ________.

Accepted Answer

A)  growth funds
B)  closed-end funds
C)  balanced funds
D)  stable fundsE) All of the above
F) None of the above

Question 4

The ratio of trading activity of a portfolio to the assets of the portfolio, is called ________.

Accepted Answer

A)  the reinvestment ratio
B)  the trading rate
C)  the portfolio turnover
D)  the tax yieldE) B) and C)
F) A) and B)

Question 5

The greatest percentage of growth fund assets are invested in ________.

Accepted Answer

A)  bond funds
B)  equity funds
C)  hybrid funds
D)  money market fundsE) A) and D)
F) A) and C)

Question 6

A mutual fund has total assets outstanding of $69 million. During the year the fund bought and sold assets equal to $17.25 million. This fund's turnover rate was ________.

Accepted Answer

A)  25.00%
B)  28.50%
C)  18.63%
D)  33.40%E) None of the above
F) A) and B)

Question 7

Balanced funds hold both ________.

Accepted Answer

A)  ETFs and A-REITs
B)  money market securities and real estates
C)  equities and commodity derivatives
D)  equities and fixed-income securitiesE) B) and D)
F) A) and D)

Question 8

The main investments of growth funds are ________.

Accepted Answer

A)  fixed-income securities
B)  real estates
C)  commodity derivatives
D)  equities securitiesE) None of the above
F) A) and B)

Question 9

Which of the following is not a type of managed investment company?

Accepted Answer

A)  Unit investment trusts
B)  Closed-end funds
C)  Open-end funds
D)  Hedge fundsE) C) and D)
F) None of the above

Question 10

Australian Real Estate Investment Trust is an example of ________.

Accepted Answer

A)  commingled pool
B)  unlisted investments
C)  listed investments
D)  money market fundE) A) and B)
F) All of the above

Question 11

Consider a mutual fund with $300 million in assets at the start of the year, and 12 million shares outstanding. If the gross return on assets is 18% and the total expense ratio is 2% of the year end value, what is the rate of return on the fund?

Accepted Answer

A)  15.64%
B)  16.00%
C)  17.25%
D)  17.50%E) All of the above
F) None of the above

Question 12

Compared with managed funds, ETFs ________.

Accepted Answer

A)  are tax exempt
B)  are free from capital gains taxes
C)  offer a potential tax advantage
D)  are tax inefficientE) B) and D)
F) A) and C)

Question 13

Managed funds that vary the proportions of funds invested in particular market sectors according to the fund manager's forecast of the performance of that market sector, are called ________.

Accepted Answer

A)  asset allocation funds
B)  balanced funds
C)  index funds
D)  income fundsE) C) and D)
F) B) and D)

Question 14

The assets of a managed fund are $25 million. The liabilities are $4 million. If the fund has 700 000 shares outstanding and pays a $3 dividend, what is the dividend yield?

Accepted Answer

A)  5%
B)  10%
C)  15%
D)  20%E) All of the above
F) A) and C)

Question 15

Assume that you have recently purchased 100 shares in an investment company. Upon examining the balance sheet, you note the firm is reporting $225 million in assets, $30 million in liabilities, and 10 million shares outstanding. What is the Net Asset Value (NAV)  of these shares?

Accepted Answer

A)  $25.50
B)  $22.50
C)  $19.50
D)  $1.95E) B) and D)
F) A) and C)

Question 16

The contribution fee of managed funds is generally around ________ of the value of the investment.

Accepted Answer

A)  2%
B)  3%
C)  4%
D)  5%E) C) and D)
F) B) and C)

Question 17

Advantages of investment companies to investors include all but which one of the following?

Accepted Answer

A)  Record keeping and administration
B)  Low-cost diversification
C)  Professional management
D)  Guaranteed rates of returnE) A) and B)
F) B) and C)

Question 18

Assume that you have just purchased some shares in an investment company reporting $500 million in assets, $50 million in liabilities, and 50 million shares outstanding. What is the Net Asset Value (NAV)  of these shares?

Accepted Answer

A)  $12.00
B)  $9.00
C)  $10.00
D)  $1.00E) All of the above
F) B) and C)

Question 19

________ is a false statement regarding open-end funds.

Accepted Answer

A)  'They offer investors a guaranteed rate of return'
B)  'They offer investors a well-diversified portfolio'
C)  'They redeem shares at their net asset value'
D)  'They offer low-cost diversificationE) C) and D)
F) None of the above

Question 20

Rank the following fund categories from most risky to least risky:
I. Equity growth fund
II. Balanced fund
III. Sector fund
IV. Money market fund

Accepted Answer

A)  IV, I, III, II
B)  III, II, IV, I
C)  I, II, III, IV
D)  III, I, II, IVE) B) and C)
F) A) and C)

Exam 4: Managed Funds and Other Investment Companies

Life-cycle funds are ________.

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Australian Real Estate Investment Trust is an example of ________.

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Assume that you have recently purchased 100 shares in an investment company. Upon examining the balance sheet, you note the firm is reporting $225 million in assets, $30 million in liabilities, and 10 million shares outstanding. What is the Net Asset Value (NAV) of these shares?

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Compared with managed funds, ETFs ________.

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The ratio of trading activity of a portfolio to the assets of the portfolio, is called ________.

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Managed funds that vary the proportions of funds invested in particular market sectors according to the fund manager's forecast of the performance of that market sector, are called ________.

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A mutual fund has total assets outstanding of $69 million. During the year the fund bought and sold assets equal to $17.25 million. This fund's turnover rate was ________.

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The main investments of growth funds are ________.

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The contribution fee of managed funds is generally around ________ of the value of the investment.

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Unlisted investments are often called ________.

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Rank the following fund categories from most risky to least risky: I. Equity growth fund II. Balanced fund III. Sector fund IV. Money market fund

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Which of the following is not a type of managed investment company?

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Advantages of investment companies to investors include all but which one of the following?

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The assets of a managed fund are $25 million. The liabilities are $4 million. If the fund has 700 000 shares outstanding and pays a $3 dividend, what is the dividend yield?

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Assume that you have just purchased some shares in an investment company reporting $500 million in assets, $50 million in liabilities, and 50 million shares outstanding. What is the Net Asset Value (NAV) of these shares?

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The investment philosophy of ETFs is ________.

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Consider a mutual fund with $300 million in assets at the start of the year, and 12 million shares outstanding. If the gross return on assets is 18% and the total expense ratio is 2% of the year end value, what is the rate of return on the fund?

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The greatest percentage of growth fund assets are invested in ________.

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________ is a false statement regarding open-end funds.

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Balanced funds hold both ________.

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