37. You purchased 250 shares of common stock on margin for $25 per share. The initial margin is 65% and the stock pays no dividend. Your rate of return would be __________ if you sell the stock at $32 per share. Ignore interest on margin. A. 35% B. 39% C. 43% D. 28%
38. Which one of the following invests in a portfolio that is fixed for the life of the fund? A. Mutual fund
B. Money market fund
C. Managed investment company D. Unit investment trust
39. 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. A. commingled pool B. unit trust C. hedge fund
D. money market fund
40. A contingent deferred sales charge is commonly called a ____. A. front-end load B. back-end load C. 12b-1 charge
D. top end sales commission
41. 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? A. $12.00 B. $9.00 C. $10.00 D. $1.00
42. 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 __________.
A. in proportion to the market value weight of the firm's equity in the S&P500 B. in proportion to the price weight of the stock in the S&P500
C. by purchasing an equal number of shares of each stock in the S&P 500
D. by purchasing an equal dollar amount of shares of each stock in the S&P500
43.Investors who wish to liquidate their holdings in a closed-end fund may ___________________. A. sell their shares back to the fund at a discount if they wish B. sell their shares back to the fund at net asset value C. sell their shares on the open market
D. sell their shares at a premium to net asset value if they wish
44. __________ funds stand ready to redeem or issue shares at their net asset value. A. Closed-end
B. Index C. Open-end D. Hedge
45. 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? A. 15.64% B. 16.00% C. 17.25% D. 17.50%
46. A/an _____ is an example of an exchange-traded fund. A. SPDR or spider B. samurai C. Vanguard
D. open-end fund
47. 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. A. Class A B. Class B
C. There is no difference.
D. There is insufficient information given.
48. Advantages of ETFs over mutual funds include all but which one of the following? A. ETFs trade continuously so investors can trade throughout the day B. ETFs can be sold short or purchased on margin, unlike fund shares C. ETF providers do not have to sell holdings to fund redemptions D. ETF values can diverge from NAV
49. 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? A. $50.00 B. $55.44 C. $56.12 D. $54.55
50. 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? A. 4.35% B. 4.23% C. 6.45% D. 5.63%