Question 1

Historical evidence indicates that load funds perform better than no-load funds.

Accepted Answer

A) True 
 B)False

Question 2

Short-term mutual funds invest solely in tax-exempt securities.

Accepted Answer

A) True 
 B)False

Question 3

Benefits of investing in an exchange traded fund (ETFI)  rather than an open-ended, no-load index mutual fund include all of the following EXCEPT.

Accepted Answer

A)  ability to buy or sell anytime during the trading day
B)  lower management fees
C)  ability to purchase on margin
D)  income tax-exempt status for capital gains
E)  ability to sell shortF) A) and B)
G) A) and E)

Question 4

The Investment Advisors Act of 1940 sets out rules to prevent conflicts of interest, fraud, and excessive fees or charges for mutual fund shares.

Accepted Answer

A) True 
 B)False

Question 5

Closed-end investment companies

Accepted Answer

A)  have a variable number of shares based on demand.
B)  can trade at a price that is greater than, equal to, or less than the NAV.
C)  will trade at a different price as the number of shares of the fund changes.
D)  issues shares that cannot be sold; hence the term "closed."
E)  .will repurchase shares when investors want to sell.F) A) and D)
G) A) and B)

Question 6

In 2015 there were approximately _______ exchange traded funds (ETFs)  in existence with combined assets valued at _______.

Accepted Answer

A)  510; $1.20 trillion
B)  1,550; 2.0 trillion
C)  860; $294 billion
D)  1,220; $960 billion
E)  1,970; $1.64 trillionF) A) and B)
G) A) and C)

Question 7

For individual investors purchasing exchange traded funds (ETFs) , which of the following is the most important entity that plays a key role in the primary market for ETF shares?

Accepted Answer

A)  Authorized participants (APs)  that interact with the ETF directly
B)  Managers of the ETF assets
C)  Market exchange officials overseeing trading in the ETF
D)  The National Association of Securities Dealers (NAS
D)   that clears the trade
E)  The specialist that records the tradeF) D) and E)
G) A) and D)

Question 8

Equity mutual funds may contain common stock, but not preferred stock.

Accepted Answer

A) True 
 B)False

Question 9

It is estimated that 75 percent of all hedge funds are located in

Accepted Answer

A)  Bermuda.
B)  Hong Kong.
C)  Cayman Islands.
D)  Luxembourg.
E)  San Marino.F) A) and D)
G) A) and C)

Question 10

A mutual fund that charges investors a fee similar to a commission charge is called a

Accepted Answer

A)  12b-1 fee.
B)  no-load fund.
C)  load fund.
D)  long-term fund.
E)  short-term fund.F) C) and E)
G) A) and C)

Question 11

A change from commercial bank deposits to money market mutual funds typically allows an investor to benefit from higher yields, but with the cost of losing deposit insurance coverage.

Accepted Answer

A) True 
 B)False

Question 12

Since 2002, the amount of assets invested in load funds have exceeded those invested in no-load funds.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is the primary regulator (s)  of mutual funds?

Accepted Answer

A)  Federal Reserve.
B)  SEC.
C)  NASD.
D)  State regulators.
E)  Stock exchanges.F) B) and E)
G) B) and C)

Question 14

The SEC requires that prospectuses or advertisements regarding a mutual fund contain information that returns of the mutual fund carry some risk.

Accepted Answer

A) True 
 B)False

Question 15

When an investor purchases shares in an exchange traded fund (ETF), he or she is interacting directly with the fund.

Accepted Answer

A) True 
 B)False

Question 16

To be deemed "accredited" and able to invest in a hedge fund, an investor must have

Accepted Answer

A)  a net worth of over $2 million.
B)  an annual income of at least $200,000.
C)  an annual income of at least $500,000 if married.
D)  a net worth of over $4 million.
E)  a retirement savings plan and over $1 million in net worth.F) A) and E)
G) A) and B)

Question 17

The return from investing in mutual funds can include dividends, gains from the sale of the mutual fund assets, and gains from the sale of the mutual fund shares.

Accepted Answer

A) True 
 B)False

Question 18

U.S.mutual fund companies have made significant progress in entering Japan and Europe.

Accepted Answer

A) True 
 B)False

Question 19

The short-term mutual fund sector includes

Accepted Answer

A)  money market mutual funds.
B)  hybrid funds.
C)  equity funds.
D)  bond funds.
E)  tax-exempt municipal bond funds.F) A) and B)
G) B) and C)

Question 20

Which of the following observations is true of a no-load fund?

Accepted Answer

A)  Purchase is subject to a sales charge.
B)  Sales charges may be as high as 8.5 percent.
C)  They market shares of the fund directly to investors.
D)  They use sales agents.
E)  They have up-front commission charges.F) B) and D)
G) A) and C)

Exam 5: Financial Services: Mutual Funds and Hedge Funds

Which of the following observations is true of a no-load fund?

Correct AnswerverifiedShow Answer

Historical evidence indicates that load funds perform better than no-load funds.

Correct AnswerverifiedShow Answer

It is estimated that 75 percent of all hedge funds are located in

Correct AnswerverifiedShow Answer

Closed-end investment companies

Correct AnswerverifiedShow Answer

To be deemed "accredited" and able to invest in a hedge fund, an investor must have

Correct AnswerverifiedShow Answer

For individual investors purchasing exchange traded funds (ETFs) , which of the following is the most important entity that plays a key role in the primary market for ETF shares?

Correct AnswerverifiedShow Answer

Since 2002, the amount of assets invested in load funds have exceeded those invested in no-load funds.

Correct AnswerverifiedShow Answer

A mutual fund that charges investors a fee similar to a commission charge is called a

Correct AnswerverifiedShow Answer

Which of the following is the primary regulator (s) of mutual funds?

Correct AnswerverifiedShow Answer

Equity mutual funds may contain common stock, but not preferred stock.

Correct AnswerverifiedShow Answer

In 2015 there were approximately _______ exchange traded funds (ETFs) in existence with combined assets valued at _______.

Correct AnswerverifiedShow Answer

The return from investing in mutual funds can include dividends, gains from the sale of the mutual fund assets, and gains from the sale of the mutual fund shares.

Correct AnswerverifiedShow Answer

The short-term mutual fund sector includes

Correct AnswerverifiedShow Answer

U.S.mutual fund companies have made significant progress in entering Japan and Europe.

Correct AnswerverifiedShow Answer

When an investor purchases shares in an exchange traded fund (ETF), he or she is interacting directly with the fund.

Correct AnswerverifiedShow Answer

The Investment Advisors Act of 1940 sets out rules to prevent conflicts of interest, fraud, and excessive fees or charges for mutual fund shares.

Correct AnswerverifiedShow Answer

The SEC requires that prospectuses or advertisements regarding a mutual fund contain information that returns of the mutual fund carry some risk.

Correct AnswerverifiedShow Answer

Benefits of investing in an exchange traded fund (ETFI) rather than an open-ended, no-load index mutual fund include all of the following EXCEPT.

Correct AnswerverifiedShow Answer

A change from commercial bank deposits to money market mutual funds typically allows an investor to benefit from higher yields, but with the cost of losing deposit insurance coverage.

Correct AnswerverifiedShow Answer

Short-term mutual funds invest solely in tax-exempt securities.

Correct AnswerverifiedShow Answer

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In 2015 there were approximately _ exchange traded funds (ETFs) in existence with combined assets valued at _.

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