Term
1. A top-down analysis of a firm's prospects starts with an analysis of the ____. |
|
Definition
b. U.S. economy or even the global economy |
|
|
Term
2. In 1980 the dollar to yen exchange rate was about $0.0045. In 2007 the yen to dollar exchange rate was about 121 yen per dollar. A Japanese producer would have had to increase the dollar price of a good sold in the U.S. by _____ to maintain the same yen price in 2007. |
|
Definition
|
|
Term
3. An increase in the value of the yen against the U.S. dollar can cause the Japanese automaker, Toyota, to either _____________ on its U.S. sales. |
|
Definition
a. lose market share or reduce its profit margin |
|
|
Term
4. You estimate that the present value of a firm's cash flow is valued at $15 million. The break up value of the firm if you were to sell the major assets and divisions separately would give $20 million. This is an example of what Peter Lynch would call a/an ___________. |
|
Definition
|
|
Term
5. Since 1999, the purchasing power of the U.S. dollar has increased relative to the purchasing power of _______. |
|
Definition
|
|
Term
6. If you believe the economy is about to go into a recession you might change your asset allocation by selling _______ and buying ______. |
|
Definition
a. growth stocks; long-term bonds |
|
|
Term
7. The yield curve spread between 10-year T-bond and federal funds rate is a _______ economic indicator. |
|
Definition
|
|
Term
8. The Conference Board's Consumer Confidence Index is released ______. |
|
Definition
|
|
Term
9. You can earn abnormal returns on your investments via macro forecasting ______. |
|
Definition
c. if you can forecast the economy better than the average forecaster |
|
|
Term
10. Which of the following industries would most analysts classify as mature? |
|
Definition
|
|
Term
11. Which one of the following stocks represents industries with below-average sensitivity to the state of the economy? |
|
Definition
|
|
Term
12. The most widely used monetary policy tool is _________. |
|
Definition
c. Open market operations |
|
|
Term
13. Which one of the following is the ratio of actual output from factories to potential output from factories? |
|
Definition
|
|
Term
14. According to __________ economists, the growth of the U.S. economy in the 1980s can be attributed to lower marginal tax rates which improved the incentives for people to work. |
|
Definition
|
|
Term
15. The market value of all goods and services produced during a given time period is called ______. |
|
Definition
|
|
Term
16. A big increase in government spending is an example of _________. |
|
Definition
a. a positive demand shock |
|
|
Term
17. GDP refers to _________. |
|
Definition
d. the total production of goods and services in the economy |
|
|
Term
18. Portfolio manager Peter Lynch would classify Coca-Cola as _________. |
|
Definition
|
|
Term
19. Attempting to forecast future earnings and dividends is consistent with which of the following approaches to securities analysis? |
|
Definition
|
|
Term
20. The analysis of the determinants of firm value is called _____________. |
|
Definition
|
|
Term
21. Which of the following companies will be the best example of a turnaround? Portfolio manager Peter Lynch would classify Coca-Cola as _________. |
|
Definition
|
|
Term
22. Inflation is caused by ________________. |
|
Definition
b. rapid growth of money supply |
|
|
Term
23. Everything else equal, if you expect a larger interest rate increase than other market participants, you should _________. |
|
Definition
|
|
Term
24. To obtain an approximate estimate of the real interest rate, one must _________ the __________ the nominal risk-free rate. |
|
Definition
d. subtract; expected inflation from |
|
|
Term
25. Which of the following would not be considered a supply shock? |
|
Definition
d. An increase in the level of government spending |
|
|
Term
26. If economic conditions are such that very slow growth is expected in the foreseeable future, one would want to invest in industries with __________ sensitivity to economic conditions. |
|
Definition
|
|
Term
27. Which of the following is not an example of fiscal policy? |
|
Definition
c. Fed purchases of Treasury securities |
|
|
Term
28. Supply side economics tends to focus on _______________. |
|
Definition
d. increasing productive capacity |
|
|
Term
29. Which one of the following describes the amount by which government spending exceeds government revenues? |
|
Definition
|
|
Term
30. Which one of the following is probably the most direct and immediate way to stimulate or slow the economy although it is not very useful for fine tuning economic performance? |
|
Definition
|
|
Term
31. In macroeconomic terms an increase in the price of imported oil or a decrease in the availability of oil is an example of a _________. |
|
Definition
|
|
Term
32. ______________ in interest rates are associated with stock market declines |
|
Definition
b. Unanticipated increases |
|
|
Term
33. The average duration of unemployment is _________. |
|
Definition
c. a lagging economic indicator |
|
|
Term
34. The ratio of the purchasing power of two economies is termed the _______. |
|
Definition
|
|
Term
35. Everything else equal, an increase in the government budget deficit would ______. I. increase the government's demand for funds II. shift the demand curve for funds to the left III. increase the interest rate in the economy |
|
Definition
|
|
Term
36. Which of the following affects a firm's sensitivity of its earnings to the business cycle? I. Financial leverage II. Operating leverage III. Type of product |
|
Definition
|
|
Term
37. Which of the following describes the rate at which your ability to purchase grows while you hold an interest-earning investment? |
|
Definition
d. The real interest rate |
|
|
Term
38. An example of a highly cyclical industry is _________. |
|
Definition
a. the automobile industry |
|
|
Term
39. The stock price index and contracts and orders for non defense capital goods are _________. |
|
Definition
a. leading economic indicators |
|
|
Term
40. Which one of the following is not a demand shock? |
|
Definition
d. Improvements in education of U.S. workers |
|
|
Term
41. Which one of the following is not a U.S. supply shock? |
|
Definition
d. Increases in Chinese purchases of U.S. exports |
|
|
Term
42. Pharmaceuticals, food, and other necessities would be good performers during the ____ stage of the business cycle. |
|
Definition
|
|
Term
43. Capital goods industries such as industrial equipment, transportation or construction would be good investments during the _____ stage of the business cycle. |
|
Definition
|
|
Term
44. If you are going to earn abnormal returns based on your macroeconomic analysis it will most likely have to be because __________. |
|
Definition
b. you are a better analyst than others |
|
|
Term
44. If the economy is going into a recession, a good industry to invest in would be the __________ industry. |
|
Definition
|
|
Term
46. The Board of Governors of the Federal Reserve System are appointed by ____________ to serve _____________ terms. |
|
Definition
c. the President; 14 year |
|
|
Term
47. A firm in the early stages of its industry life cycle will likely have _________. |
|
Definition
a. low dividend payout rates |
|
|
Term
48. Which of the following describes the ratio of the number of people classified as out of work to the total labor force? |
|
Definition
|
|
Term
49. Which of the following is the rate at which the general level of prices for goods and services is rising? |
|
Definition
|
|
Term
50. An analyst starts by examining the broad economic environment and then considers the implications of the economy on the industry in which the firm operates. Finally, the firm's position within the industry is examined This is called __________ analysis. |
|
Definition
|
|
Term
51. Assume that the Federal Reserve increases the money supply. This will cause ____________. I. interest rates to decrease II. consumption and investment to decrease III. inflation to fall |
|
Definition
|
|
Term
52. The discount rate is the ________. |
|
Definition
b. interest rate the Fed charges commercial banks on short term loans |
|
|
Term
53. If the currency of your country is depreciating, this should __________ exports and __________ imports. |
|
Definition
|
|
Term
54. If interest rates increase, business investment expenditures are likely to __________ and consumer durable expenditures are likely to _________. |
|
Definition
|
|
Term
55. Increases in the money supply will cause demand for investment and consumption goods to __________ in the short run and may cause prices to __________ in the long run. |
|
Definition
|
|
Term
56. The nominal interest rate is 6%. The inflation rate is 3%. The exact real interest rate must be |
|
Definition
|
|
Term
57. The nominal interest rate is 10%. The real interest rate is 4%. The inflation rate must be _________. |
|
Definition
|
|
Term
58. Order the following stages in the industry life cycle from earliest to latest that occur after the start up phase ________. I. maturity II. relative decline III. consolidation |
|
Definition
|
|
Term
59. An investment strategy which entails shifting the portfolio into industry sectors that are forecast to outperform others based on macroeconomic forecasts is termed ______________. |
|
Definition
|
|
Term
60. Firm A produces gadgets. The price of gadgets is $2 each. Firm A has total fixed costs of $1,000,000 and variable costs of $1.00 per gadget. The corporate tax rate is 40%. If the economy is strong, the firm will sell 2,000,000 gadgets. If the economy enters a recession it will sell only half as many gadgets. If the economy enters a recession, the after-tax profit of Firm A will be _________. |
|
Definition
|
|
Term
61. Firm B produce gadgets. The price of gadgets is $2 each. Firm B has total fixed costs of $300,000 and variable costs of $1.40 per gadget. The corporate tax rate is 30%. If the economy is strong, the firm will sell 2,000,000 gadgets. If the economy enters a recession it will sell only half as many gadgets. If the economy is strong, the after-tax profit of Firm B will be _________. |
|
Definition
|
|
Term
62. The Fed funds rate is the __________. |
|
Definition
b. interest rate banks charge each other for overnight loans of deposits on reserve at the Fed |
|
|
Term
63. Firm B produce gadgets. The price of gadgets is $2 each. Firm B has total fixed costs of $300,000 and variable costs of $1.40 per gadget. The corporate tax rate is 40%. What is the breakeven number of gadgets B must sell to make a zero after tax profit? |
|
Definition
|
|
Term
64. The goal of supply side policies is to _______. |
|
Definition
b. create an environment where workers and owners of capital have the maximum incentive and ability to produce and develop goods |
|
|
Term
An industry analysis for manufacturers of a small personal care gadget observed the following characteristics: |
|
Definition
1. Industry sales have grown at 15-20% per year in recent years are expected to grow at 10-15% per year over the next three years, still well above the economic growth rate.
2. Some U.S. manufacturers are attempting to enter fast growing non-U.S. markets, which remain largely unexploited
3. Some manufacturers have created a new niche in the industry by selling directly to customers through mail order. Sales for this industry segment are growing at 40% per year.
4. The current penetration rate in the U.S. is 60% of households and will be difficult to increase.
5. Manufacturers compete fiercely on the basis of price, and price wars within the industry are common.
6. Some manufacturers are able to develop new, unexploited niche markets in the U.S. based on company reputation, quality, and service.
7. Several manufacturers have recently merged, and it is expected that consolidation in the industry will increase.
8. New manufacturers continue to enter the market. |
|
|
Term
65. Characteristics 4 and 5 would indicate that the industry is in the _________ stage. |
|
Definition
|
|
Term
66. Characteristics _______ would be typical of an industry that is in the start-up stage. |
|
Definition
d. none of the characteristics listed match the start-up stage |
|
|
Term
67. Characteristics ____ would be typical of an industry that is in the consolidation stage. |
|
Definition
|
|
Term
68. Which of the characteristics would be typical of an industry that is in the maturity stage? |
|
Definition
|
|
Term
69. Counter-cyclical fiscal policy is best described by which of the following statements? |
|
Definition
a. Government surpluses are planned during economic booms, and deficits are planned during economic recessions |
|
|
Term
70. A supply side economist would likely agree with which of the following statements? |
|
Definition
c. Real output and aggregate employment are primarily determined by tax rates. |
|
|
Term
71. Which of the following actions should the central bank take if monetary authorities want to reduce the supply of money to slow the rate of inflation? |
|
Definition
a. Sell government bonds, reducing money supply, increasing interest rates and slowing aggregate demand |
|
|
Term
72. The decline in the value of the dollar relative to the yen will have what impact on the purchase of U.S. goods in Japan? |
|
Definition
c. U.S. goods will decrease in cost and Japan will import more. |
|
|
Term
73. Which of the following are examples of cyclical industries? I. Maytag II. Computer chip manufacturers III. Kellogg's Frosted Flakes IV. Pfizer |
|
Definition
|
|
Term
74. You would expect the beta of cyclical industries to be ______ and the beta of defensive industries to be ______. |
|
Definition
a. greater than 1; less than 1 |
|
|
Term
75. What economic variable is most closely associated with increasing corporate profits? |
|
Definition
c. Gross domestic product |
|
|
Term
76. The federal government decides to pay for the transition to private social security accounts with a one time $1 trillion bond issue. What will be the biggest concern to businesses relative to the "crowding out" effect? |
|
Definition
a. Higher interest rates due to the new government borrowing |
|
|
Term
77. An expanding economy requires more workers. If the supply of workers becomes inadequate to meet the demand, what is the likely impact on the economy? |
|
Definition
d. Inflation may result from upward wage pressures |
|
|
Term
78. An expanding economy puts stress on the manufacturing ability of a company. When a firm turns business down during periods of economic expansion a problem exist in the area of ____________. |
|
Definition
|
|
Term
79. The expansion of the money supply at a rate that exceeds the increase in goods and services will likely result in ___________. |
|
Definition
|
|
Term
80. The supply of funds in the economy is controlled primarily by ____________. |
|
Definition
a. the Federal Reserve System |
|
|
Term
81. The classification system used to classify firms into industries is now called the _____ code. |
|
Definition
|
|
Term
82. During 2004 China increased its use of global oil by 40%. This followed a 100% increase during the previous 5 years. How do economists refer to this kind of economic event? |
|
Definition
|
|
Term
83. Whenever OPEC attempts to influence the price of oil by significantly altering production, economists refer to this type of event as a ______________. |
|
Definition
|
|
Term
84. Items that are ____________ and product purchases where ________ is not important tend to be less cyclical in nature. |
|
Definition
|
|
Term
85. Cash cows are typically found in the _________ stage of the industry life cycle. |
|
Definition
|
|
Term
86. At what point in an industry life cycle are inefficiencies in competitors most likely to be removed? |
|
Definition
|
|
Term
87. Stalwarts are typically found in the _________ stage of the industry life cycle |
|
Definition
|
|
Term
88. Large growth companies generally emerge in the __________ stage. |
|
Definition
|
|
Term
89. Which of the following comprise barriers to entry? I. Large economies of scale required to be profitable II. Established brand loyalty III. Patent protection for the firm's product IV. Rapid industry growth |
|
Definition
|
|
Term
1. Which one of the following invests in a portfolio that is fixed for the life of the fund |
|
Definition
|
|
Term
2. ______ are partnerships of investors with portfolios that are larger than most individual investors but are still too small to warrant managing on a separate basis.
|
|
Definition
|
|
Term
3. A __________ is a private investment pool open only to wealthy or institutional investors that is exempt from SEC regulation and can therefore pursue more speculative policies than mutual funds. |
|
Definition
|
|
Term
4. Advantages of investment companies to investors include all but which one of the following?
|
|
Definition
D. Guaranteed rates of return |
|
|
Term
5. Which of the following typically employ significant amounts of leverage? I. Hedge funds II. REITs III. Money market funds IV. Equity mutual funds
|
|
Definition
|
|
Term
6. The NAV of which funds is fixed at $1 per share?
|
|
Definition
|
|
Term
7. The two principal types of REITs are equity trusts which _______________ and mortgage trusts which _______________.
|
|
Definition
A. invest directly in real estate; invest in mortgage and construction loans |
|
|
Term
8. A contingent deferred sales charge is commonly called a ____.
|
|
Definition
|
|
Term
9. In the U.S. there are approximately _______ mutual funds offered by less than _______ fund families. |
|
Definition
|
|
Term
10. In 1999, the SEC established rules that should make a mutual fund prospectus _______. |
|
Definition
A. easier to read and understand |
|
|
Term
11. Mutual funds provide the following for their shareholders:
|
|
Definition
D. Mutual funds provide diversification, professional management, and record keeping and administration |
|
|
Term
12. The average maturity of fund investments in a money market mutual fund is _______. |
|
Definition
A. slightly more than one month |
|
|
Term
13. Rank the following fund category from most risky to least risky. I. Equity growth fund II. Balanced fund III. Sector fund IV. Money market fund
|
|
Definition
|
|
Term
14. Which of the following result in a taxable event for investors? I. Short-term capital gains distributions from the fund II. Dividend distributions from the fund III. Long-term capital gains distributions from the fund |
|
Definition
|
|
Term
15. The type of mutual fund that primarily engages in market timing is called a/an _______.
|
|
Definition
|
|
Term
16. As of 2008, approximately _____ of mutual fund assets were invested in equity funds. |
|
Definition
|
|
Term
17. As of 2008, approximately _____ of mutual fund assets were invested in bond funds. |
|
Definition
|
|
Term
18. As of 2008, approximately _____ of mutual fund assets were invested in money market funds.
|
|
Definition
|
|
Term
19. Management fees for open-end and closed-end funds, typically range between _____ and _____.
|
|
Definition
|
|
Term
20. The primary measurement unit used for assessing the value of one's stake in an investment company is ___________________.
|
|
Definition
|
|
Term
21. Net Asset Value is defined as ________________________. |
|
Definition
D. market value of assets minus liabilities divided by shares outstanding |
|
|
Term
22. 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?
|
|
Definition
|
|
Term
23. 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?
|
|
Definition
|
|
Term
24. The Vanguard 500 Index Fund tracks the performance of the S&P 500. To do so the fund buys shares in each S&P 500 company __________. |
|
Definition
A. in proportion to the market value weight of the firm's equity in the S&P500 |
|
|
Term
25. Which of the following is not a type of managed investment company? |
|
Definition
A. Unit investment trusts |
|
|
Term
26. Which of the following funds invest in stocks of fast growing companies?
|
|
Definition
|
|
Term
27. A fund that invests in securities worldwide, including the United States is called a/an ______.
|
|
Definition
|
|
Term
28. The greatest percentage of mutual fund assets are invested in ________. |
|
Definition
|
|
Term
29. Sponsors of unit investment trusts earn a profit by ___________________. |
|
Definition
C. selling shares in the trust at a premium to the cost of acquiring the underlying assets |
|
|
Term
30. Investors who wish to liquidate their holdings in a unit investment trust may ___________________.
|
|
Definition
B. sell their shares back to the trustee at net asset value |
|
|
Term
31. Investors who wish to liquidate their holdings in a closed-end fund may ___________________. |
|
Definition
C. sell their shares on the open market |
|
|
Term
32. __________ fund is defined as one where the fund charges a sales commission to either buy into or exit the fund.
|
|
Definition
|
|
Term
33. __________ is a false statement regarding open-end mutual funds.
|
|
Definition
A. They offer investors a guaranteed rate of return |
|
|
Term
34. __________ funds stand ready to redeem or issue shares at their net asset value.
|
|
Definition
|
|
Term
35. Revenue sharing with respect to mutual funds refers to _________.
|
|
Definition
A. fund companies paying brokers if the broker recommends the fund to investors |
|
|
Term
36. Higher portfolio turnover I. results in greater tax liability for investors II. results in greater trading costs for the fund, which investors have to pay for III. is a characteristic of asset allocation funds
|
|
Definition
|
|
Term
37. Low load mutual funds have front-end loads of no more than _____.
|
|
Definition
|
|
Term
38. Most real estate investment trusts (REITs) have a debt ratio of around _________. |
|
Definition
|
|
Term
39. Measured by assets, about _____ of funds are money market funds. |
|
Definition
|
|
Term
40. Which of the following is not a type of real estate investment trust? I. Equity trust II. Debt trust III. Mortgage trust IV. Unit trust |
|
Definition
|
|
Term
41. ______________________ are often called mutual funds.
|
|
Definition
B. Open-end investment companies |
|
|
Term
42. Mutual funds account for roughly ______ percent of investment company assets.
|
|
Definition
|
|
Term
43. An official description of a particular mutual fund's planned investment policy can be found in the fund's _____________.
|
|
Definition
|
|
Term
44. Mutual funds that hold both equities and fixed-income securities in relatively stable proportions are called ____________________. |
|
Definition
|
|
Term
45. Mutual 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 ____________________.
|
|
Definition
A. asset allocation funds |
|
|
Term
46. Specialized sector funds concentrate their investments in _________________.
|
|
Definition
D. securities issued by firms in a particular industry |
|
|
Term
47. If a mutual fund has multiple class shares, which class typically has a front end load?
|
|
Definition
|
|
Term
48. The commission, or front-end load, paid when you purchase shares in mutual funds, may not exceed __________.
|
|
Definition
|
|
Term
49. You are considering investing in one of several mutual funds. All the funds under consideration have various combinations of front-end and back-end loads and/or 12b-1 fees. The longer you plan on remaining in the fund you choose, the more likely you will prefer a fund with a __________ rather than a __________, everything else equal. |
|
Definition
B. front-end load; 12b-1 fee |
|
|
Term
50. Under SEC rules, the managers of certain funds are allowed to deduct charges for advertising, brokerage commissions, and other sales expenses, directly from the fund assets rather than billing investors. These fees are known as ____________.
|
|
Definition
|
|
Term
51. In 2000, the SEC instituted new rules that require funds to disclose _____.
|
|
Definition
B. the tax impact of portfolio turnover |
|
|
Term
52. SEC rule 12b-1 allows managers of certain funds to deduct __________ expenses from fund assets, however, these expenses may not exceed __________ of the fund's average net assets per year.
|
|
Definition
|
|
Term
53. 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?
|
|
Definition
|
|
Term
54. Consider a no-load mutual fund with $200 million in assets and 10 million shares at the start of the year, and $250 million in assets and 11 million shares at the end of the year. During the year investors have received income distributions of $2 per share, and capital gains distributions of $0.25 per share. Assuming that the fund carries no debt, and that the total expense ratio is 1%, what is the rate of return on the fund?
|
|
Definition
|
|
Term
55. Consider a no-load mutual fund with $400 million in assets, 50 million in debt, and 15 million shares at the start of the year; and $500 million in assets, 40 million in debt, and 18 million shares at the end of the year. During the year investors have received income distributions of $0.50 per share, and capital gains distributions of $0.30 per share. Assuming that the fund carries no debt, and that the total expense ratio is 0.75%, what is the rate of return on the fund?
|
|
Definition
|
|
Term
56. Mutual fund returns may be granted pass-through status, if _________________.
|
|
Definition
D. All of these must be true for pass-through status to be granted |
|
|
Term
57. A/an _____ is an example of an exchange-traded fund.
|
|
Definition
|
|
Term
58. If you place an order to buy or sell a share of a mutual fund during the trading day the order will be executed at
|
|
Definition
A. the NAV calculated at the market close at 4:00 pm New York time. |
|
|
Term
59. With respect to mutual funds, late trading refers to the practice of ________.
|
|
Definition
C. accepting buy or sell orders after the market closes and NAV has already been determined for the day |
|
|
Term
60. In the 1970 study, Malkiel found that mutual funds that do well in one period, have an approximately ________ chance of doing well in the subsequent ear period. |
|
Definition
|
|
Term
61. In a recent study, Malkiel finds that evidence of persistence in the performance of mutual funds, ________________ in the 1980s. |
|
Definition
|
|
Term
62. The ratio of trading activity of a portfolio to the assets of the portfolio, is called ____________.
|
|
Definition
C. the portfolio turnover |
|
|
Term
63. Which of the following ETFs tracks the S&P 500 index? |
|
Definition
|
|
Term
64. The Stone Harbor Fund is a closed-end investment company with a portfolio currently worth $300 million. It has liabilities of $5 million and 9 million shares outstanding. If the fund sells for $30 a share, what is its premium or discount as a percent of NAV?
|
|
Definition
|
|
Term
65. The difference between balanced funds and asset allocation funds is that _____.
|
|
Definition
C. balanced funds have relatively stable proportions of stocks and bonds while the proportions may vary dramatically for asset allocation funds |
|
|
Term
66. The Wildwood Fund sells Class A shares with a front-end load of 5% and Class B Shares with a 12b-1 fees of 1% annually. If you plan to sell the fund after 4 years, are Class A or Class B shares the better choice? Assume a 10% annual return net of expenses.
|
|
Definition
|
|
Term
67. 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 _____. |
|
Definition
|
|
Term
68. Which type of investment fund is commonly known to invest in options and futures in large scale?
|
|
Definition
|
|
Term
69. Advantages of ETFs over mutual funds include all but which one of the following?
|
|
Definition
D. ETF values can diverge from NAV |
|
|
Term
70. Harold has just taken his company public and owns a large quantity of restricted stock. For purposes of diversification, what fund might he help create in order to diversify his holdings?
|
|
Definition
|
|
Term
71. Which of the following funds is most likely to have a debt ratio of 70% or higher? |
|
Definition
|
|
Term
72. About _________ of mutual fund assets are invested in no-load funds |
|
Definition
|
|
Term
73. From 1971 to 2007 the average return on the Wilshire 5000 index was _________ the return of the average mutual fund |
|
Definition
|
|
Term
74. An open-end fund has a NAV of $16.50 per share. The fund charges a 6% load. What is the offering price?
|
|
Definition
|
|
Term
75. The offer price of an open-end fund is $18.00 and the fund is sold with a front-end load of 5%? What is the fund's NAV?
|
|
Definition
|
|
Term
76. A mutual fund has $50 million in assets at the beginning of the year and 1 million shares outstanding throughout the year. Throughout the year assets grow at 12%. The fund imposes a 12b-1 fee on all shares equal to 1%. The fee is imposed on year end asset values. If there are no distributions what is the end of year NAV for the fund? |
|
Definition
|
|
Term
77. The assets of a mutual 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? |
|
Definition
|
|
Term
78. Which of the following funds are usually most tax efficient?
|
|
Definition
|
|
Term
79. You invest in a mutual fund that charges a 3% front end load, 1% total annual fees, and a 2% back end load, which decreases 0.5% per year. How much will you pay in fees on a $10,000 investment that does not grow, if you cash out after three years of no gain?
|
|
Definition
D. 635
total fees = 10,000 - (10,000 x .97) x (.99) x (.99) x (.99) x (.995) = 635 |
|
|
Term
80. You invest in a mutual fund that charges a 3% front end load, 1% total annual fees, and a 0% back end load on Class A shares. The same fund charges 0% front end load, 1% total annual fees, and a 2% back end load on Class B shares. What are the total fees in year one on a Class A investment of $20,000 with no growth in value?
|
|
Definition
B. 794
First year fees = 20,000 - (20,000 x .97 x .99) = 794 |
|
|
Term
81. You invest in a mutual fund that charges a 3% front end load, 1% total annual fees, and a 0% back end load on Class A shares. The same fund charges 0% front end load, 1% total annual fees, and a 2% back end load on Class B shares. What are the total fees in year one on a Class B investment of $20,000 if you redeem shares with no growth in value?
|
|
Definition
A. 596
Total fees after one year = 20,000 - (20,000 x 0.98 x 0.99) = 596 |
|
|
Term
82. You pay $21,600 to the Laramie Fund which has a NAV of $18.00 per share at the beginning of the year. The fund deducted a front-end load of 4%. The securities in the fund increased in value by 10% during the year. The fund's expense ratio is 1.3% and is deducted from year end asset values. What is your rate of return on the fund if you sell your shares at the end of the year? |
|
Definition
|
|
Term
83. Which one of the following statements about returns reported by mutual funds is not correct?
|
|
Definition
D. Reported returns are net of load charges |
|
|
Term
84. The top Morningstar mutual fund performance rating is ________.
|
|
Definition
|
|
Term
85. You are considering investing in a no load mutual fund with an annual expense ratio of 0.6% and an annual 12b-1 fee of 0.75%. You could also invest in a bank CD paying 6.5% per year. What minimum annual rate of return must the fund earn to make you better off in the fund than in the CD?
|
|
Definition
|
|