This work of BUS 405 Week 1 Chapter 4 Mutual Funds contains:

1. An investment company:

2. An investment company that will repurchase shares at any time is called a(n) _____ fund.

3. An investment company that issues a fixed number of shares which can only be resold in the open stock market is called a(n) _____ fund.

4. The value of a load mutual fund’s assets less its liabilities, divided by the number of shares outstanding is referred to as the fund’s:

5. A fee that is charged at the time mutual fund shares are purchased by an investor is called a:

6. A 12b-1 fee is a fee charged by a mutual fund:

7. The turnover for a mutual fund refers to:

8. An open-end fund which invests solely in short-term debt obligations is called a(n) _____ mutual fund.

9. A fund that is basically an index fund that trades like a closed-end fund is called a(n):

10. Which one of the following describes an investment company that generally has an unrestricted investment strategy and is not accessible to the general public?

11. Which of the following are three key advantages of mutual funds?

12. Which one of the following statements is correct concerning mutual funds?

13. Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?

14. Which one of the following statements correctly relates to closed-end funds?

15. Shares in closed-end funds:

16. A mutual fund is owned by:

17. A mutual fund is created by which one of the following parties?

18. Mutual funds are generally created to:

19. Investment advisory firms generally provide which of the following services to a mutual fund?

20. An investment company will be treated as a “regulated investment company” by the Internal Revenue Service provided that it:

I. invests almost all of its assets in bonds, stocks, and other securities.

II. invests solely in U.S. securities.

III. does not invest more than two percent of its assets in any one security.

IV. passes all its realized investment income through to its shareholders.

21. The income earned by a regulated investment company is:

22. Today, you are selling shares of an open-end mutual fund and will be charged a CDSC of 3 percent. The price you will receive per share is equal to:

23. Which one of the following costs can a mutual fund shareholder avoid by holding shares for an extended period of time?

24. When the offering price and the NAV are the same, you know that a mutual fund is not charging which one of the following fees?

25. Assume a mutual fund is a pure no-load fund. Which of the following costs should an investor still expect to incur?

I. contingent deferred sales charge

II. management fee

III. trading costs

IV. redemption fee

26. Contingent deferred sales charges:

27. Mutual fund trading costs:

28. Which one of the following is NOT included in the fee table found in a mutual fund prospectus?

29. What are the two best reasons for considering a load fund?

30. Money market mutual funds do which one of the following?

31. The net asset value of a money market mutual fund:

32. Money market mutual funds:

33. To determine the actual objective of a fund, you should primarily refer to the:

34. Which type of stock fund focuses on maximizing share price appreciation?

35. Which type of stock fund focuses primarily on current income?

36. Small-cap funds:

37. The primary difference between an international fund and a global fund is the fact that:

38. Which type of fund should you purchase if you are interested in investing primarily in countries that have relatively new stock markets?

39. A sector fund:

40. A fund which tracks the S&P 500 would best be classified as which type of fund?

41. Which one of the following characteristics best fits an index fund?

42. You want to purchase shares in a fund and also ensure that your money does not support firms that harm the environment. Which type of fund should you purchase?

43. Which one of the following is a general characteristic of a tax-managed fund?

44. Which one of the following is the distinguishing characteristic of a municipal bond fund?

45. Which one of the following types of bond funds tends to have the highest level of risk?

46. Rose wants to invest in a bond fund. She is a very conservative investor with a high marginal tax rate. Which one of the following types of bond funds might be most suited for her situation?

47. Jim has managed to save $1,000 and wants to start investing. The financial markets make him nervous as he has very limited financial resources. Which one of the following types of funds is probably best for Jim at this time?

48. Which one of the following types of funds invests in both stocks and bonds and actively attempts to time the market?

49. Which one of the following types of funds is most apt to invest in preferred stocks?

50. Besides size, how else does a mutual fund style box classify equity funds?

51. Letter grades are most frequently assigned to mutual funds based on the fund’s:

52. Trading symbols for mutual funds end in which letter?

53. While reviewing mutual fund reports, Alex noticed that a fund was reported as “closed”. What is the primary reason for closing a fund?

54. You recently purchased a fund at a price of $39.97 per share. The NAV at the time of purchase was $40.67. You must have purchased a(n) _____ fund.

55. Which one of the following is a common characteristic of a closed-end fund but not of an open-end fund?

56. If you purchase shares in a closed-end fund at the initial offer price, you should expect to:

57. Which one of the following trading symbols is associated with the ETF on the S&P 500 index?

58. An ETF is best described as:

59. Which of the following can you do with an ETF that you cannot do with an open-end fund?

I. sell at mid-day prices

II. short sell

III. buy options on them

IV. resell

60. Exchange traded notes were first created to mimic _____ index.

61. Which one of the following statements is true?

62. ETFs are:

63. Which one of the following correctly applies to hedge funds?

64. Which of the following will exempt a hedge fund from registering with the SEC?

65. A hedge fund may charge a special performance fee which commonly ranges from:

66. Currently, the term “hedge fund” refers to:

67. A hedge fund:

68. The Blue Star Fund has assets with a market value of $10.3 million and liabilities of $207,000. What is the net asset value if there are 175,000 shares outstanding?

69. The Latest Trend Fund has $2,648,900 in assets, and $1,878,400 in liabilities. How many shares are outstanding if the NAV is $10.07?

70. A mutual fund has an NAV of $10.60 with 268,300 shares outstanding. What is the value of the fund’s assets if it has $211,400 in liabilities?

71. The Atlas Mutual Fund owns the following stocks: The fund has no liabilities and has 65,000 shares outstanding. What is the NAV?

72. The Market Stability Fund owns the following stocks: The fund has no liabilities and has 57,600 shares outstanding. What is the NAV?

73. At the beginning of the year, you invested $4,000 in a no-load mutual fund with a NAV of $20.00. At the end of the year, the fund distributed $1.06 in short-term earnings and $3.10 in long-term earnings. The end of year NAV was $19.42. What was your annual rate of return on this investment?

74. You invested $8,000 in a mutual fund when the offering price was $32.50 and the NAV was $31.20. This purchase was made one year ago today. Today, the fund distributed a total of $1.67 in long-term gains and $0.82 in short-term gains. The current offering price is $33.42 and the NAV is $32.08. What is your return for the year?

75. One year ago, you purchased 421 shares of a mutual fund when both the offering price and the NAV were $10.80 a share. Today, the NAV is $10.64 after today’s distribution of $1.48 per share in shortterm gains. There is no long-term gain distribution. What is your rate of return?

76. One year ago, you purchased $5,000 worth of a mutual fund at an offering price of $42.09 a share. Today, the fund distributed $0.18 in short-term gains and $1.79 in long-term gains. The current offering price is $43.80. The fund has a front-end load of 5 percent and total annual operating expenses of 1.3 percent. What is your rate of return on this investment?

77. The Stone Wall Fund has an offer price of $32.90 and a front-end load of 3.25 percent. What is the net asset value?

78. The European Growth Fund has $920 million in assets and $68,000 in liabilities. There are 29.6 million shares outstanding. The fund charges a 4.5 percent front-end load. What is the offering price?

79. A mutual fund has a current offering price of $52.31. What is the net asset value if the fund charges a 3 percent front-end load?

80. The High Growth Technology Fund has an NAV of $54.08 and a 5.5 percent front-end load. What is the offering price?

81. The Stable Utility Fund has an offering price of $54.11 and an NAV of $52.48. What is the front-end load percentage?

82. You want to buy 1,200 shares of a mutual fund that has an NAV of $28.50. The fund charges a 3.5 percent front-end load. How much will you have to spend to make this purchase?

83. You are investing $8,000 in a mutual fund that charges a 4.50 percent front-end load. The offering price is $24.70 a share. What will your investment be worth immediately after your shares are purchased?

84. Alex invested $10,000 in a mutual fund two and one-half years ago when the NAV of the fund was $25. Today, the NAV has risen to $28.30. Since the time of his original investment, Alex has obtained an additional 54.36 shares by reinvesting the fund distributions. The fund charges a contingent deferred sales charge of 7 percent the first year with the charge decreasing by 1 percent each year. How much money will he receive if he redeems his shares today?

85. You invested $5,000 in a mutual fund 27 months ago when the NAV of the fund was $30.00. You have not acquired or sold any shares since that time. Today, the NAV is $28.40. The fund charges a contingent deferred sales charge of 6, 5, 4, 3, 2, 2, and 1 percent if the shares are redeemed within the first 7 years, respectively. How much money will you receive if you redeem your shares today?

86. One year ago, Allison purchased 250 shares of a mutual fund which has a front-end load of 5.75 percent. The NAV at the time of purchase was $40. Today, the NAV is $42. The fund had total annual expenses of 1.65 percent. There were no fund distributions this past year. What is Allison’s rate of return for the year?

87. Five months ago, you purchased 200 shares of a mutual fund at an offering price of $54 a share. The fund imposes a front-end load of 4.5 percent and has total annual expenses of 1.08 percent. The NAV of the fund today is $52.40. There were no fund distributions during these five months. What is your holding period return on this investment?

88. Eastern States Mutual Fund sold $85 million of assets during the year and purchased $92 million of new assets. The average daily assets of the fund were $340 million. What is the fund’s turnover rate for the year?

89. The Aggressive Eastern Fund sold $167 million of assets during the year and purchased $162 million of new assets. The average daily assets of the fund were $248 million. What is the turnover rate?

90. Matt owns 724.08 shares of a fund which has a current NAV of $44.17. He has owned all of these shares for 3.3 years. The fund charges a contingent deferred sales charge which starts at 6 percent for the first year and declines by 1 percent each year. How much cash will he receive if he redeems all of his shares today?

91. Seven years ago, you purchased 216.34 shares of a mutual fund. Since then, you have reinvested your fund dividends and acquired an additional 31.02 shares. The fund currently has an NAV of $38.06. The fund charges a contingent deferred sales charge of 5 percent for the first 2 years after which time the charge declines by 1 percent a year. How much money will you receive if you redeem all of your shares today?

92. You invest $4,800 in a money market fund at the beginning of the year. The fund’s assets appreciate by 2.7 percent over the year. How many shares of the fund do you own at the end of the year?

93. One year ago, you invested $7,000 in the no-load Triple A Money Market Fund. You have neither added to this account nor received any funds from this account since that time. The fund earned a 5.2 percent rate of return for the past year. How many shares of this fund do you currently own?

94. The High Yield Money Market Fund returned 5.75 percent for the last year. Currently, you own 9,042.08 shares of this fund. If you invested in this fund one year ago, what was the amount of your original investment?

95. A taxable money market fund has an annual return of 4.62 percent. What is the equivalent aftertax yield if the tax rate is 27 percent?

96. A tax exempt money market fund has an annual return of 3.82 percent. What is your equivalent taxable rate if you are in a 32 percent marginal tax bracket?

97. The Exploratory Fund is a new closed-end fund which just offered its shares to the public. The fund raised $65 million and each share sold for $10. The fee for the fund promoter was 6.5 percent of the initial proceeds. What was the value of your initial $20,000 purchase before the shares began trading in the marketplace?

98. A closed-end fund has total assets of $379 million and liabilities of $640,000. There are 36 million shares outstanding. What is the premium or discount if the shares are currently selling for $9.80 each?

99. Which type of investor is most apt to purchase municipal bond funds and why?

100. You want to purchase a security that tracks the S&P 500. What types of securities can you purchase to accomplish this goal? Which type of security would you purchase and why would you choose that security over your other options?

101. What are the primary differences between an ETF and an ETN?