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Exam 4: Mutual Funds and Other Investment Companies

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Question 41

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Mutual funds provide the following for their shareholders:

A) Diversification
B) Professional management
C) Record keeping and administration
D) Mutual funds provide diversification, professional management, and record keeping and administration

E) B) and D)
F) A) and B)

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Question 42

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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.

A) marketing; 1%
B) marketing; 5%
C) administrative; 0.5%
D) administrative; 2%

E) None of the above
F) C) and D)

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Question 43

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Which of the following ETFs tracks the S&P 500 index?

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 __________.

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

__________ funds stand ready to redeem or issue shares at their net asset value.

With respect to mutual funds,late trading refers to the practice of ________.

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?

Mutual funds account for roughly ______ percent of investment company assets.

Sponsors of unit investment trusts earn a profit by ___________________.

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?

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?

Measured by assets,about _____ of funds are money market funds.

In 1999,the SEC established rules that should make a mutual fund prospectus _______.

A/an _____ is an example of an exchange-traded fund.

In the U.S.there are approximately _______ mutual funds offered by less than _______ fund families.

Mutual fund returns may be granted pass-through status,if _________________.

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?

An open-end fund has a NAV of $16.50 per share.The fund charges a 6% load.What is the offering price?

Which of the following funds are usually most tax efficient?