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31. A back-end load fund will likely have an initial cost of

a.the NAV less the load.

b.the NAV plus the 12b-1 fees.

c.the NAV plus the back-end load

d.the NAV.

 

32. The major regulatory body representing investors’ interest is the

a.Securities and Exchange Commission

b.Security Investors Protection Commission

c.Federal Reserve System

d.Federal Trade Commission

 

33. An investment in a 3% front-end load mutual fund with a $20 NAV would cost the               investor:

a.$20.00

b.$19.40

c.$20.60

d.$23.00

e.$17.00

 

34.You consider investing $10,000 in a stock mutual fund and you are choosing between               Fund A, which has a front-end load of 3%, and Fund B, which has a back-end load of               3%.  Expected returns and fees of the two funds are identical. Which fund would you               choose?

a.Fund A

b.Fund B

c.You are indifferent (total expected returns are the same after accounting for the loads)

d.More information is needed to make the choice.

 

35.Which of the following is best associated with hedge fund investors?

a.employees in a 401k pension plan.

b.commercial banks

c.high net worth individuals and institutions.

d.investors seeking to hedge their business price risk.

 

36.Hedge funds are typically organized as:

a.limited partnerships

b.corporations

c.proprietorships

d.any of the above

 

37.Hedge funds would provide investor portfolio diversification benefits if:

a.the correlation of returns from the hedge fund and the investor’s portfolio is close to +1.

b.the hedge fund and the portfolio are investing in the same things.

c.the correlation of returns from the hedge fund and the investor’s portfolio is negative.

d.the hedge fund portfolio includes none of the investments of the investor’s portfolio.

 

38.Which of the following is not the difference between hedge funds and mutual funds?

a.Mutual funds are registered with the SEC, while hedge funds are not.

b.Unlike mutual funds, hedge funds borrow significant amounts of their capital.

c.Unlike mutual funds, hedge funds concentrate their investment in very few areas.

d.Unlike mutual funds, hedge funds are managed by professional fund managers.

 

39.If a hedge fund manager focused on short-selling of stocks, he/she would

a.invest in company stock for short-term profits.

b.invest in companies with high future growth prospects.

c.borrow money to invest in stocks.

d.select companies where the future supply of securities might exceed demand.

 

40. The arbitrage activities of hedge funds seeks to:

a.estimate what stocks will appreciate in the near future.

b.capitalize on capital market inefficiencies.

c.estimate the future price of derivative securities.

d.make significant gains from underwriting securities.

 

 

 

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