投资学第7版testbank答案04.docx

投资学第7版testbank答案04.docx

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投资学第7版testbank答案04

MultipleChoiceQuestions

1.Whichoneofthefollowingstatementsregardingopen-endmutualfundsisfalse

A）Thefundsredeemsharesatnetassetvalue.

B）Thefundsofferinvestorsprofessionalmanagement.

C）Thefundsofferinvestorsaguaranteedrateofreturn.

D）BandC.

E）AandB.

Answer:

CDifficulty:

Moderate

Rationale:

Noinvestmentoffersaguaranteedrateofreturn.

2.Whichoneofthefollowingstatementsregardingclosed-endmutualfundsisfalse

A）ThefundsalwaystradeatadiscountfromNAV.

B）Thefundsredeemsharesattheirnetassetvalue.

C）Thefundsofferinvestorsprofessionalmanagement.

D）AandB.

E）Noneoftheabove.

Answer:

DDifficulty:

Moderate

Rationale:

Closed-endfundsaresoldattheprevailingmarketprice.

3.Whichofthefollowingfunctionsdomutualfundcompaniesperformfortheirinvestors

A）Recordkeepingandadministration

B）Diversificationanddivisibility

C）Professionalmanagement

D）Lowertransactioncosts

E）Alloftheabove.

Answer:

EDifficulty:

Easy

Rationale:

Mutualfundsareattractivetoinvestorsbecausetheyofferallofthelistedservices.

4.MultipleMutualFundshadyear-endassetsof$457,000,000andliabilitiesof$17,000,000.Therewere24,300,000sharesinthefundatyear-end.WhatwasMultipleMutual'sNetAssetValue

A）$

B）$

C）$

D）$

E）$

Answer:

ADifficulty:

Moderate

Rationale:

（457,000,000-17,000,000）/24,300,000=$

5.GrowthFundhadyear-endassetsof$862,000,000andliabilitiesof$12,000,000.Therewere32,675,254sharesinthefundatyear-end.WhatwasGrowthFund'sNetAssetValue

A）$

B）$

C）$

D）$

E）$

Answer:

DDifficulty:

Moderate

Rationale:

（862,000,000-12,000,000）/32,675,254=$

6.DiversifiedPortfolioshadyear-endassetsof$279,000,000andliabilitiesof$43,000,000.IfDiversified'sNAVwas$,howmanysharesmusthavebeenheldinthefund

A）43,000,000

B）6,488,372

C）5,601,709

D）1,182,203

E）Noneoftheabove.

Answer:

CDifficulty:

Moderate

Rationale:

（$279,000,000-43,000,000）/$=5,601,.

7.PinnacleFundhadyear-endassetsof$825,000,000andliabilitiesof$25,000,000.IfPinnacle'sNAVwas$,howmanysharesmusthavebeenheldinthefund

A）21,619,346,92

B）22,930,

C）24,860,

D）25,693,

E）Noneoftheabove.

Answer:

CDifficulty:

Moderate

Rationale:

（$825,000,000-25,000,000）/$=24,860,.

8.Mostactivelymanagedmutualfunds,whencomparedtoamarketindexsuchastheWilshire5000,

A）beatthemarketreturninallyears.

B）beatthemarketreturninmostyears.

C）exceedthereturnonindexfunds.

D）donotoutperformthemarket

E）Noneoftheaboveisacorrectstatement.

Answer:

DDifficulty:

Easy

Rationale:

Mostactivelymanagedmutualfundsfailtoequalthereturnearnedbyindexfunds,possiblyduetohighertransactionscosts.

9.Poolsofmoneyinvestedinaportfoliothatisfixedforthelifeofthefundarecalled

A）closed-endfunds.

B）open-endfunds.

C）unitinvestmenttrusts.

D）REITS.

E）redeemabletrustcertificates.

Answer:

CDifficulty:

Easy

Rationale:

Unitinvestmenttrustsarefundsthatinvestinaportfolio,oftenfixed-incomesecurities,andholdittomaturity.

10.Investorsinclosed-endfundswhowishtoliquidatetheirpositionsmust

A）selltheirsharesthroughabroker.

B）selltheirsharestotheissueratadiscounttoNetAssetValue.

C）selltheirsharestotheissueratapremiumtoNetAssetValue.

D）selltheirsharestotheissuerforNetAssetValue.

E）holdtheirsharestomaturity.

Answer:

ADifficulty:

Moderate

Rationale:

Closed-endfundsharesaresoldonorganizedexchangesthroughabroker.

11.Closedendfundsarefrequentlyissuedata______toNAVandsubsequentlytradeata__________toNAV.

A）discount,discount

B）discount,premium

C）premium,premium

D）premium,discount

E）Noconsistentrelationshiphasbeenobserved.

Answer:

DDifficulty:

Moderate

Rationale:

Closed-endfundsaretypicallyissuedatapremiumtoNetAssetValueandsubsequentlytradeatadiscount.

12.Atissue,offeringpricesofopen-endfundswilloftenbe

A）lessthanNAVduetoloadsandcommissions.

B）greaterthanNAVduetoloadsandcommissions.

C）lessthanNAVduetolimiteddemand.

D）greaterthanNAVduetoexcessdemand.

E）lessthanorgreaterthanNAVwithnoapparentpattern.

Answer:

BDifficulty:

Difficult

Rationale:

Open-endfundsareredeemableondemandatNAVsotheyshouldneversellforlessthanNAV.However,loadsandcommissionscanincreasethepriceaboveNAV.

13.WhichofthefollowingstatementsaboutRealEstateInvestmentTrustsistrue

A）REITSinvestinrealestateorloanssecuredbyrealestate.

B）REITSraisecapitalbyborrowingfrombanksandissuingmortgages.

C）REITSaresimilartoopen-endfunds,withsharesredeemableatNAV.

D）Alloftheabovearetrue.

E）BothAandBaretrue.

Answer:

EDifficulty:

Moderate

Rationale:

RealEstateInvestmentTrustsinvestinrealestateorreal-estate-securedloans.Theymayraisecapitalfrombanksandbyissuingmortgages.Theyaresimilartoclosed-endfundsandsharesaretypicallyexchangetraded.

14.In2004theproportionofmutualfundsspecializingincommonstockswas

A）%

B）%

C）%

D）%

E）%

Answer:

CDifficulty:

Moderate

Rationale:

SeeTable.

15.In2004theproportionofmutualfundsspecializinginbondswas

A）%

B）%

C）%

D）%

E）%

Answer:

ADifficulty:

Moderate

Rationale:

SeeTable.

16.In2004theproportionofmutualfundsspecializinginmoneymarketsecuritieswas

A）%

B）%

C）%

D）%

E）%

Answer:

CDifficulty:

Moderate

Rationale:

SeeTable.

17.Managementfeesandotherexpensesofmutualfundsmayinclude

A）front-endloads.

B）back-endloads.

C）12b-1charges.

D）AandBonly.

E）A,BandC.

Answer:

EDifficulty:

Easy

Rationale:

Allofthelistedexpensesmaybeincludedinthecostofowningamutualfund.

18.TheProfitabilityFundhadNAVpershareof$onJanuary1,2005.OnDecember31ofthesameyearthefund'sNAVwas$.Incomedistributionswere$andthefundhadcapitalgaindistributionsof$.Withoutconsideringtaxesandtransactionscosts,whatrateofreturndidaninvestorreceiveontheProfitabilityfundlastyear

A）%

B）%

C）%

D）%

E）%

Answer:

DDifficulty:

Moderate

Rationale:

R=（$-+.75+/$=%

19.TheYachtsmanFundhadNAVpershareof$onJanuary1,2005.OnDecember31ofthesameyearthefund'sNAVwas$.Incomedistributionswere$andthefundhadcapitalgaindistributionsof$.Withoutconsideringtaxesandtransactionscosts,whatrateofreturndidaninvestorreceiveontheYachtsmanFundlastyear

A）%

B）%

C）%

D）%

E）%

Answer:

EDifficulty:

Moderate

Rationale:

R=（$-+.64+/$=%

20.Investors'ChoiceFundhadNAVpershareof$onJanuary1,2005.OnDecember31ofthesameyearthefund'srateofreturnfortheyearwas%.Incomedistributionswere$andthefundhadcapitalgaindistributionsof$.Withoutconsideringtaxesandtransactionscosts,whatendingNAVwouldyoucalculateforInvestors'Choice

A）$

B）$

C）$

D）$

E）$

Answer:

ADifficulty:

Moderate

Rationale:

.173=（P-$++/$;P=$

21.Whichofthefollowingisnotanadvantageofmutualfunds

A）Theyofferavarietyofinvestmentstyles.

B）Theyoffersmallinvestorsthebenefitsofdiversification.

C）Theytreatincomeas"passedthrough"totheinvestorfortaxpurposes.

D）A,BandCarealladvantagesofmutualfunds.

E）NeitherAnorBnorCareadvantagesofmutualfunds.

Answer:

CDifficulty:

Easy

Rationale:

Adisadvantageofmutualfundsisthatinvestmentincomeispassedthroughfortaxpurposesandinvestorsmaythereforelosetheabilitytoengageintaxmanagement.

22.Whichofthefollowingwouldincreasethenetassetvalueofamutualfundshare,assumingallotherthingsremainunchanged

A）anincreaseinthenumberoffundsharesoutstanding

B）anincreaseinthefund'saccountspayable

C）achangeinthefund'smanagement

D）anincreaseinthevalueofoneofthefund'sstocks

E）adecreaseinthefund's12b-1fee

Answer:

DDifficulty:

Easy

23.Whichofthefollowingcharacteristicsapplytounitinvestmenttrusts

I）Mostareinvestedinfixed-incomeportfolios.

II）Theyareactivelymanagedportfolios.

III）Thesponsorpoolssecurities,thensellspublicsharesinthetrust.

IV）Theportfolioisfixedforthelifeofthefund.

A）IandIV

B）IandII

C）I,III,andIV

D）I,II,andIII

E）I,II,III,andIV

Answer:

CDifficulty:

Moderate

24.JargonRapidGrowthisamutualfundthathastraditionallyacceptedfundsfromnewinvestorsandissuednewsharesatnetassetvalue.JeremyJargonmanagesthefundhimselfandhasbecomeconcernedthatitslevelofassetshasbecometoohighforhismanagementabilities.HeissuesastatementthatJargonwillnolongeracceptfundsfromnewinvestors,butwillcontinuetoacceptadditionalinvestmentsfromcurrentshareholders.WhichofthefollowingistrueaboutJargonRapidGrowthfund

A）Jargonusedtobeanopen-endfundbuthasnowbecomeaclosed-endfund.

B）Jargonhasalwaysbeenanopen-endfundandwillremainanopen-endfund.

C）Jargonhasalwaysbeenaclosed-endfundandwillremainaclosed-endfund.

D）Jargonisanopen-endfundbutwouldchangetoaclosed-endfundifitwouldn'tacceptadditionalfundsfromcurrentinvestors.

E）JargonisviolatingSECpolicybyrefusingtoac