Chapter 04 Mutual Funds and other Investment Companies

1. Which one of the following statements regarding open-end mutual funds is false?
A. The funds redeem shares at net asset value.
B. The funds offer investors professional management.
C. The funds offer investors a guaranteed rate of return.
D.BandC.
E.AandB.
No investment offers a guaranteed rate of return.
Difficulty: Moderate
2. Which one of the following statements regarding closed-end mutual funds is false?
A. The funds always trade at a discount from NAV.
B. The funds redeem shares at their net asset value.
C. The funds offer investors professional management.
D.AandB.
E. None of the above.
Closed-end funds are sold at the prevailing market price.
Difficulty: Moderate
3. Which of the following functions do mutual fund companies perform for their investors?
A. Record keeping and administration
B. Diversification and divisibility
C. Professional management
D. Lower transaction costs E. All of the above.
Mutual funds are attractive to investors because they offer all of the listed services.
Difficulty: Easy
4. Multiple Mutual Funds had year-end assets of $457,000,000 and liabilities of $17,000,000.
There were 24,300,000 shares in the fund at year-end. What was Multiple Mutual's Net
Asset Value?
A. $18.11
B. $18.81
C. $69.96 D. $7.00 E. $181.07
(457,000,000 - 17,000,000) / 24,300,000 = $18.11
Difficulty: Moderate
5. Growth Fund had year-end assets of $862,000,000 and liabilities of $12,000,000. There
were 32,675,254 shares in the fund at year-end. What was Growth Fund's Net Asset Value?
A. $28.17
B. $25.24
C. $19.62 D. $26.01 E. $21.56
(862,000,000 - 12,000,000) / 32,675,254 = $26.01
Difficulty: Moderate
6. Diversified Portfolios had year-end assets of $279,000,000 and liabilities of $43,000,000.
If Diversified's NAV was $42.13, how many shares must have been held in the fund?
A. 43,000,000
B. 6,488,372
C. 5,601,709
D. 1,182,203
E. None of the above.
($279,000,000 - 43,000,000) / $42.13 = 5,601,708.996.
Difficulty: Moderate
7. Pinnacle Fund had year-end assets of $825,000,000 and liabilities of $25,000,000. If
Pinnacle's NAV was $32.18, how many shares must have been held in the fund?
A. 21,619,346,92
B. 22,930,546.28
C. 24,860,161.59
D. 25,693,645.25
E. None of the above.
($825,000,000 - 25,000,000) / $32.18 = 24,860,161.59.
Difficulty: Moderate
8. Most actively managed mutual funds, when compared to a market index such as the
Wilshire 5000,
A. beat the market return in all years.
B. beat the market return in most years.
C. exceed the return on index funds.
D. do not outperform the market
E. None of the above is a correct statement.
Most actively managed mutual funds fail to equal the return earned by index funds, possibly due
to higher transactions costs.
Difficulty: Easy
9. Pools of money invested in a portfolio that is fixed for the life of the fund are called
A. closed-end funds.
B. open-end funds.
C. unit investment trusts.
D. REITS.
E. redeemable trust certificates.
Unit investment trusts are funds that invest in a portfolio, often fixed-income securities, and hold
it to maturity.
Difficulty: Easy
10. Investors in closed-end funds who wish to liquidate their positions must
A. sell their shares through a broker.
B. sell their shares to the issuer at a discount to Net Asset Value.
C. sell their shares to the issuer at a premium to Net Asset Value.
D. sell their shares to the issuer for Net Asset Value.
E. hold their shares to maturity.
Closed-end fund shares are sold on organized exchanges through a broker.
Difficulty: Moderate
11. Closed end funds are frequently issued at a ______ to NAV and subsequently trade at a
__________ to NAV.
A. discount, discount
B. discount, premium
C. premium, premium
D. premium, discount
E. No consistent relationship has been observed.
Closed-end funds are typically issued at a premium to Net Asset Value and subsequently trade at
a discount.
Difficulty: Moderate
12. At issue, offering prices of open-end funds will often be
A. less than NAV due to loads and commissions.
B. greater than NAV due to loads and commissions.
C. less than NAV due to limited demand.
D. greater than NAV due to excess demand.
E. less than or greater than NAV with no apparent pattern.
Open-end funds are redeemable on demand at NAV so they should never sell for less than NAV.
However, loads and commissions can increase the price above NAV.
Difficulty: Difficult
13. Which of the following statements about Real Estate Investment Trusts is true?
A. REITs invest in real estate or loans secured by real estate.
B. REITs raise capital by borrowing from banks and issuing mortgages.
C. REITs are similar to open-end funds, with shares redeemable at NAV.
D. All of the above are true. E. Both A and B are true.
Real Estate Investment Trusts invest in real estate or real-estate-secured loans. They may raise
capital from banks and by issuing mortgages. They are similar to closed-end funds and shares are
typically exchange traded.
Difficulty: Moderate
14. Which of the following statements about Real Estate Investment Trusts is true?
A. REITs may be equity trusts or mortgage trusts.
B. REITs are usually highly-leveraged.
C. REITs are similar to closed-end funds.
D. All of the above are true. E. Both A and C are true.
Real Estate Investment Trusts invest in real estate or real-estate-secured loans. They may raise
capital from banks and by issuing mortgages. They are similar to closed-end funds and shares are
typically exchange traded.
Difficulty: Moderate
15. Which of the following statements about Money Market Mutual Funds is true?
A. They invest in commercial paper, CDs, and repurchase agreements.
B. They usually offer check-writing privileges.
C. They are highly leveraged and risky.
D. All of the above are true.
E. Both A and B are true.
Money Market Mutual Funds invest in commercial paper, CDs, repurchase agreements, and
other money market securities. They usually offer check-writing privileges. Their NAV is is fixed
at $1 per share.
Difficulty: Moderate
16. In 2007 the proportion of mutual funds specializing in common stocks was
A. 21.7%
B. 28.0%
C. 56.8%
D. 73.4%
E. 63.5%
See Table 4.1.
Difficulty: Moderate
17. In 2007 the proportion of mutual funds specializing in bonds was
A. 14.4%
B. 28.0%
C. 54.1%
D. 73.4% E. 63.5%
See Table 4.1.
Difficulty: Moderate
18. In 2007 the proportion of mutual funds specializing in money market securities was
A. 21.7%
B. 28.0%
C. 54.1%
D. 73.4%
E. 22.6%
See Table 4.1.
Difficulty: Moderate
19. In 2007 the proportion of hybrid (bond and stock) mutual funds was
A. 21.7%
B. 28.0%
C. 54.1%
D. 6.3%
E. 22.6%
See Table 4.1.
Difficulty: Moderate
20. Management fees and other expenses of mutual funds may include
A. front-end loads.
B. back-end loads.
C. 12b-1 charges.
D.A and B only.
E.A,B and C.
All of the listed expenses may be included in the cost of owning a mutual fund.
Difficulty: Easy
21. The Profitability Fund had NAV per share of $17.50 on January 1, 2007. On December
31 of the same year the fund's NAV was $19.47. Income distributions were $0.75 and the
fund had capital gain distributions of $1.00. Without considering taxes and transactions
costs, what rate of return did an investor receive on the Profitability fund last year?
A. 11.26%
B. 15.54%
C. 16.97%
D. 21.26%
E. 9.83%
R = ($19.47 - 17.50 + .75 + 1.00) / $17.50 = 21.26%
Difficulty: Moderate
22. The Yachtsman Fund had NAV per share of $36.12 on January 1, 2007. On December
31 of the same year the fund's NAV was $39.71. Income distributions were $0.64 and the
fund had capital gain distributions of $1.13. Without considering taxes and transactions
costs, what rate of return did an investor receive on the Yachtsman Fund last year?
A. 22.92%
B. 17.68%
C. 14.39%
D. 18.52%
E. 14.84%
R = ($39.71 - 36.12 + .64 + 1.13) / $36.12 = 14.84%
Difficulty: Moderate
23. Investors' Choice Fund had NAV per share of $37.25 on January 1, 2007. On December
31 of the same year the fund's rate of return for the year was 17.3%. Income distributions
were $1.14 and the fund had capital gain distributions of $1.35. Without considering taxes
and transactions costs, what ending NAV would you calculate for Investors' Choice?
A. $41.20
B. $33.88
C. $43.69
D. $42.03
E. $46.62
.173 = (P - $37.25 + 1.14 + 1.35) / $37.25; P = $41.20
Difficulty: Moderate
24. Which of the following is not an advantage of mutual funds?
A. They offer a variety of investment styles.
B. They offer small investors the benefits of diversification.
C. They treat income as "passed through" to the investor for tax purposes.
D. A, B and C are all advantages of mutual funds.
E. Neither A nor B nor C are advantages of mutual funds.
A disadvantage of mutual funds is that investment income is passed through for tax purposes and
investors may therefore lose the ability to engage in tax management.
Difficulty: Easy
25. Which of the following would increase the net asset value of a mutual fund share,
assuming all other things remain unchanged?
A. an increase in the number of fund shares outstanding
B. an increase in the fund's accounts payable
C. a change in the fund's management
D. an increase in the value of one of the fund's stocks
E. none of the above
A and B would decrease NAV and C would have an uncertain effect (and then only in the future).
However, an increase in the value of one of the fund's stocks would increase NAV.
Difficulty: Easy
26. Which of the following characteristics apply to unit investment trusts?
I) Most are invested in fixed-income portfolios.
II) They are actively managed portfolios.
III) The sponsor pools securities, then sells public shares in the trust.
IV) The portfolio is fixed for the life of the fund.
A. I and IV
B. I and II
C. I, III, and IV
D. I, II, and III
E. I, II, III, and IV
Three chief characteristics of UITs are that (1) the sponsor pools securities, and then sells public
shares in the trust, (2) the portfolio is fixed for the life of the fund, and (3) most are invested in
fixed-income portfolios.
Difficulty: Moderate
27. Jargon Rapid Growth is a mutual fund that has traditionally accepted funds from new
investors and issued new shares at net asset value. Jeremy Jargon manages the fund
himself and has become concerned that its level of assets has become too high for his
management abilities. He issues a statement that Jargon will no longer accept funds from
new investors, but will continue to accept additional investments from current
shareholders. Which of the following is true about Jargon Rapid Growth fund?
A. Jargon used to be an open-end fund but has now become a closed-end fund.
B. Jargon has always been an open-end fund and will remain an open-end fund.
C. Jargon has always been a closed-end fund and will remain a closed-end fund.
D. Jargon is an open-end fund but would change to a closed-end fund if it wouldn't accept
additional funds from current investors.
E. Jargon is violating SEC policy by refusing to accept new investors.
Because Jargon accepts funds from investors, it is an open-end fund. Once closed-end start
trading, they are only traded in the secondary market. However, when the decision was made to
stop accepting investments from new investors, it became a closed-fund.
Difficulty: Moderate
28. As of 2007, which class of mutual funds had the largest amount of assets invested?
A. stock funds
B. bond funds
C. mixed asset classes such as asset allocation funds
D. money market funds
E. global funds
See Table 4.1.
Difficulty: Easy
29. Commingled funds are
A. amounts invested in equity and fixed-income mutual funds.
B. funds that may be purchased at intervals of 3, 6, or 12 month intervals at the discretion of
management.
C. amounts invested in domestic and global equities.
D. closed-end funds that may be repurchased only once every two years at the discretion of
mutual fund management.
E. partnerships of investors that pool their funds, which are then managed for a fee.
Commingled funds are partnerships of investors that pool their funds, which are then managed
for a fee.
Difficulty: Easy
30. Which of the following is true regarding equity mutual funds:
I) They invest primarily in stock.
II) They may hold fixed-income securities as well as stock.
III) Most hold money market securities as well as stock.
IV) Two types of equity funds are income funds and growth funds.
A.I and IV
B. I, III, and IV
C.I,II and IV
D. I, II, and III
E. I, II, III, and IV
Equity mutual funds can be classified as income funds or growth funds. Equity mutual funds
invest primarily in stock but may hold fixed-income securities as well. Most hold money market
securities to reduce the need to redeem securities to meet uncertain redemptions on a daily basis.
Difficulty: Moderate
31. The fee that mutual funds use to help pay for advertising and promotional literature is
called a
A. front-end load fee.
B. back-end load fee.
C. operating expense fee.
D. 12b-1 fee.
E. structured fee.
A and B are used to compensate the sales force and C is used to cover operating expenses. Rule
12b-1 allows a small fee to cover advertising and promotion.
Difficulty: Easy
32. Patty O'Furniture purchased 100 shares of Green Isle mutual fund at a net asset value
of $42 per share. During the year Patty received dividend income distributions of $2.00 per
share and capital gains distributions of $4.30 per share. At the end of the year the shares
had a net asset value of $40 per share. What was Patty's rate of return on this investment?
A. 5.43%
B. 10.24%
C. 7.19%
D. 12.44%
E. 9.18%
R=($40-42+2+4.3)/$42=10.238%
Difficulty: Moderate
33. Assume that you purchased 200 shares of Super Performing mutual fund at a net asset
value of $21 per share. During the year you received dividend income distributions of $1.50
per share and capital gains distributions of $2.85 per share. At the end of the year the
shares had a net asset value of $23 per share. What was your rate of return on this
investment?
A. 30.24%
B. 25.37%
C. 27.19%
D. 22.44%
E. 29.18%
R = ($23 - 21 + 1.5 + 2.85)/$21 = 30.238%
Difficulty: Moderate
34. Assume that you purchased shares of High Flying mutual fund at a net asset value of
$12.50 per share. During the year you received dividend income distributions of $0.78 per
share and capital gains distributions of $1.67 per share. At the end of the year the shares
had a net asset value of $13.87 per share. What was your rate of return on this investment?
A. 29.43%
B. 30.56%
C. 31.19%
D. 32.44%
E. 29.18%
R = ($13.87 - 12.50 + 0.78 + 1.67)/$12.50 = 30.56%
Difficulty: Moderate
35. Assume that you purchased shares of a mutual fund at a net asset value of $14.50 per share.
During the year you received dividend income distributions of $0.27 per share and capital gains
distributions of $0.65 per share. At the end of the year the shares had a net asset value of $13.74
per share. What was your rate of return on this investment?
A. 2.91%
B. 3.07%
C. 1.10%
D. 1.78%
E. -1.18%
R = ($13.74 - 14.50 + 0.27 + 0.65)/$14.50 = 1.103%
Difficulty: Moderate
36. Assume that you purchased shares of a mutual fund at a net asset value of $10.00 per
share. During the year you received dividend income distributions of $0.05 per share and
capital gains distributions of $0.06 per share. At the end of the year the shares had a net
asset value of $8.16 per share. What was your rate of return on this investment?
A. -18.24%
B. -16.1%
C. 16.10%
D. -17.3%
E. 17.3%
R = ($8.16 - 10.00 + 0.05 + 0.06)/$10.00 = -17.3%
Difficulty: Moderate
37. A mutual fund had year-end assets of $560,000,000 and liabilities of $26,000,000. There
were 23,850,000 shares in the fund at year end. What was the mutual fund's Net Asset
Value?
A. $22.87
B. $22.39
C. $22.24 D. $17.61 E. $19.25
(560,000,000 - 26,000,000) / 23,850,000 = $22.389
Difficulty: Moderate
38. A mutual fund had year-end assets of $250,000,000 and liabilities of $4,000,000. There
were 3,750,000 shares in the fund at year-end. What was the mutual fund's Net Asset
Value?
A. $92.53
B. $67.39
C. $63.24
D. $65.60
E. $17.46
(250,000,000 - 4,000,000) / 3,750,000 = $65.60
Difficulty: Moderate
39. A mutual fund had year-end assets of $700,000,000 and liabilities of $7,000,000. There
were 40,150,000 shares in the fund at year-end. What was the mutual fund's Net Asset
Value?
A. $9.63
B. $57.71
C. $16.42
D. $17.87
E. $17.26
(700,000,000 - 7,000,000) / 40,150,000 = $17.26
Difficulty: Moderate
40. A mutual fund had year-end assets of $750,000,000 and liabilities of $7,500,000. There
were 40,000,000 shares in the fund at year-end. What was the mutual fund's Net Asset
Value?
A. $9.63
B. $18.58
C. $16.42
D. $17.87
E. $17.26
(750,000,000 - 7,000,000) / 40,000,000 = $18.575
Difficulty: Moderate
41. A mutual fund had year-end assets of $465,000,000 and liabilities of $37,000,000. If the
fund NAV was $56.12, how many shares must have been held in the fund?
A. 4,300,000
B. 6,488,372
C. 8,601,709
D. 7,626,515
E. None of the above.
($465,000,000 - 37,000,000) / $56.12 = 7,626,515.
Difficulty: Moderate
42. A mutual fund had year-end assets of $521,000,000 and liabilities of $63,000,000. If the
fund NAV was $26.12, how many shares must have been held in the fund?
A. 17,534,456
B. 16,488,372
C. 18,601,742
D. 17,542,515
E. None of the above.
($521,000,000 - 63,000,000) / $26.12 = 17,534,456.
Difficulty: Moderate
43. A mutual fund had year-end assets of $327,000,000 and liabilities of $46,000,000. If the
fund NAV was $30.48, how many shares must have been held in the fund?
A. 11,354,751
B. 8,412,642
C. 10,165,476 D. 9,165,414
E. 9,219,160
($327,000,000 - 46,000,000) / $30.48 = 9,219,160.
Difficulty: Moderate
44. A mutual fund had year-end assets of $437,000,000 and liabilities of $37,000,000. If the
fund NAV was $60.12, how many shares must have been held in the fund?
A. 6,653,360
B. 8,412,642
C. 10,165,476
D. 9,165,414
E. 9,219,160
($437,000,000 - 37,000,000) / $60.12 = 6,653,359.947.
Difficulty: Moderate
45. A mutual fund had NAV per share of $19.00 on January 1, 2007. On December 31 of the
same year the fund's NAV was $19.14. Income distributions were $0.57 and the fund had
capital gain distributions of $1.12. Without considering taxes and transactions costs, what
rate of return did an investor receive on the fund last year?
A. 11.26%
B. 10.54%
C. 7.97%
D. 8.26%
E. 9.63%
R = ($19.14 - 19.00 + .57 + 1.12) / $19.00 = 9.63%
Difficulty: Moderate
46. A mutual fund had NAV per share of $23.00 on January 1, 2007. On December 31 of the
same year the fund's NAV was $23.15. Income distributions were $0.63 and the fund had
capital gain distributions of $1.26. Without considering taxes and transactions costs, what
rate of return did an investor receive on the fund last year?
A. 11.26%
B. 10.54%
C. 8.87%
D. 8.26%
E. 9.63%
R = ($23.15 - 23.00 + .63 + 1.26) / $23.00 = 8.869%
Difficulty: Moderate
47. A mutual fund had NAV per share of $26.25 on January 1, 2007. On December 31 of the
same year the fund's rate of return for the year was 16.4%. Income distributions were
$1.27 and the fund had capital gain distributions of $1.85. Without considering taxes and
transactions costs, what ending NAV would you calculate?
A. $27.44
B. $33.88
C. $24.69
D. $42.03
E. $16.62
.164 = (P - $26.25 + 1.27 + 1.85) / $26.25; P = $27.435
Difficulty: Moderate
48. A mutual fund had NAV per share of $16.75 on January 1, 2007. On December 31 of the
same year the fund's rate of return for the year was 26.6%. Income distributions were
$1.79 and the fund had capital gain distributions of $2.80. Without considering taxes and
transactions costs, what ending NAV would you calculate?
A. $17.44
B. $13.28
C. $14.96
D. $17.25
E. $16.62
.266 = (P - $16.75 + 1.79 + 2.80) / $16.75; P = $16.615
Difficulty: Moderate
49. A mutual fund had NAV per share of $36.15 on January 1, 2007. On December 31 of the
same year the fund's rate of return for the year was 14.0%. Income distributions were
$1.16 and the fund had capital gain distributions of $2.12. Without considering taxes and
transactions costs, what ending NAV would you calculate?
A. $37.93
B. $34.52
C. $44.69
D. $47.25
E. $36.28
.14 = (P - $36.15 + 1.16 + 2.12) / $36.15; P = $37.931
Difficulty: Moderate
50. A mutual fund had NAV per share of $37.12 on January 1, 2007. On December 31 of the
same year the fund's rate of return for the year was 11.0%. Income distributions were
$2.26 and the fund had capital gain distributions of $1.64. Without considering taxes and
transactions costs, what ending NAV would you calculate?
A. $37.93
B. $34.52
C. $45.10
D. $47.25
E. $36.28
.11 = (P - $37.12 + 2.26 + 1.64) / $37.12; P = $45.1032
Difficulty: Moderate
51. Differences between hedge funds and mutual funds are that
A. hedge funds are only subject to minimal SEC regulation.
B. hedge funds are typically open only to wealthy or institutional investors.
C. hedge funds managers can pursue strategies not available to mutual funds such as short
selling, heavy use of derivatives, and leverage.
D. are commonly structured as private partnerships.
E. all of the above
Hedge funds are typically open only to wealthy or institutional investors, are commonly
structured as private partnerships, are only subject to minimal SEC regulation, and can pursue
strategies not available to mutual funds such as short selling, heavy use of derivatives, and
leverage.
Difficulty: Moderate
52. Of the following types of mutual funds, an investor that wishes to invest in a diversified
portfolio of stocks worldwide (including the U.S.) should choose
A. international funds.
B. global funds.
C. regional funds.
D. emerging market funds. E. none of the above.
International funds exclude the U.S. but global funds include the U.S.
Difficulty: Moderate
53. Of the following types of mutual funds, an investor that wishes to invest in a diversified
portfolio of foreign stocks (excluding the U.S.) should choose
A. International funds
B. Global funds
C. Regional funds
D. Emerging market funds E. None of the above
International funds exclude the U.S. but global funds include the U.S.
Difficulty: Moderate
54. Of the following types of EFTs, an investor that wishes to invest in a diversified
portfolio that tracks the S&P 500 should choose
A.SPY.
B. DIA.
C. QQQ. D. IWM. E. VTI.
SPY tracks the S&P 500.
Difficulty: Moderate
55. Of the following types of EFTs, an investor that wishes to invest in a diversified
portfolio that tracks the Dow Jones Industrials should choose
A.SPY.
B. DIA.
C. QQQ. D. IWM. E. VTI.
DIA tracks the DJIA.
Difficulty: Moderate
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56. Of the following types of EFTs, an investor that wishes to invest in a diversified
portfolio that tracks the Nasdaq 100 should choose
A.SPY.
B. DIA.
C. QQQ. D. IWM. E. VTI.
QQQ tracks the Nasdaq 100.
Difficulty: Moderate
57. Of the following types of EFTs, an investor that wishes to invest in a diversified
portfolio that tracks the Russell 2000 should choose
A.SPY.
B. DIA.
C. QQQ. D. IWM. E. VTI.
IWM tracks the Russell 2000.
Difficulty: Moderate
58. Of the following types of EFTs, an investor that wishes to invest in a diversified
portfolio that tracks the Wilshire 5000 should choose
A.SPY.
B. DIA.
C. QQQ. D. IWM. E. VTI.
VTI tracks the Wilshire 5000.
Difficulty: Moderate
59. Of the following types of EFTs, an investor that wishes to invest in a diversified
portfolio that tracks the MSCI Japan Index should choose
A.SPY.
B. EWJ.
C. QQQ. D. IWM. E. VTI.
EWJ tracks the MSCI Japan Index.
Difficulty: Moderate
60. Of the following types of EFTs, an investor that wishes to invest in a diversified
portfolio that tracks the MSCI France Index should choose
A.SPY.
B. EWJ.
C. EWQ. D. IWM. E. VTI.
EWQ tracks the MSCI France Index.
Difficulty: Moderate
61. A mutual funds had average daily assets of $3.0 billion in 2007. The fund sold $600
million worth of stock and purchased $700 million worth of stock during the year. The
funds turnover ratio is ___.
A. 27.5%
B. 12%
C. 15%
D. 25%
E. 20%
600,000,000 / 3,000,000,000 = 20%
Difficulty: Moderate
62. A mutual funds had average daily assets of $2.0 billion on 2007. The fund sold $500
million worth of stock and purchased $600 million worth of stock during the year. The
funds turnover ratio is ___.
A. 27.5%
B. 12%
C. 15%
D. 25%
E. 20%
500,000,000 / 2,000,000,000 = 25%
Difficulty: Moderate
63. A mutual funds had average daily assets of $4.0 billion on 2007. The fund sold $1.5
billion worth of stock and purchased $1.6 billion worth of stock during the year. The funds
turnover ratio is ____________.
A. 37.5%
B. 22%
C. 15%
D. 45%
E. 20%
1,500,000,000 / 4,000,000,000 = 37.5%
Difficulty: Moderate
64. A mutual funds had average daily assets of $4.7 billion on 2007. The fund sold $2.2
billion worth of stock and purchased $3.6 billion worth of stock during the year. The funds
turnover ratio is ____________.
A. 37.5%
B. 22.6%
C. 15.3%
D. 46.8%
E. 20.7%
2,200,000,000 / 4,700,000,000 = 46.8%
Difficulty: Moderate
65. You purchased shares of a mutual fund at a price of $20 per share at the beginning of
the year and paid a front-end load of 5.75%. If the securities in which the find invested
increased in value by 11% during the year, and the funds expense ratio was 1.25%, your
return if you sold the fund at the end of the year would be ____________.
A. 4.33
B. 3.44
C. 2.45
D. 6.87
E. None of the above
{[$20 * .9425 * (1.11 - .0125)] - $20} / $20 = 3.44%
Difficulty: Difficult
66. You purchased shares of a mutual fund at a price of $12 per share at the beginning of
the year and paid a front-end load of 4.75%. If the securities in which the fund invested
increased in value by 9% during the year, and the funds expense ratio was 1.5%, your
return if you sold the fund at the end of the year would be ____________.
A. 4.75
B. 3.54
C. 2.65
D. 2.39
E. None of the above
{[$12 * .9525 * (1.09 - .015)] - $12} / $12 = 2.39%
Difficulty: Difficult
67. You purchased shares of a mutual fund at a price of $17 per share at the beginning of
the year and paid a front-end load of 5.0%. If the securities in which the find invested
increased in value by 12% during the year, and the funds expense ratio was 1.0%, your
return if you sold the fund at the end of the year would be ____________.
A. 4.75
B. 5.45
C. 5.65
D. 4.39
E. None of the above
{[$17*.95*(1.12-.01)]-$17}/$17=5.45%
Difficulty: Difficult
68. You purchased shares of a mutual fund at a price of $20 per share at the beginning of
the year and paid a front-end load of 6.0%. If the securities in which the find invested
increased in value by 10% during the year, and the funds expense ratio was 1.5%, your
return if you sold the fund at the end of the year would be ____________.
A. 1.99
B. 2.32
C. 1.65
D. 2.06
E. None of the above
{[$20 * .94 * (1.10 - .015)] - $20} / $20 = 1.99%
Difficulty: Difficult