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41.Investment funds provide investors all of the following except:

a.diversification.

b.contractual rate of return.

c.professional advice.

d.small minimum investment.

 

42.Unit investment trusts provide all of the following advantages to investors except:

a.diversification

b.professional organization and investment selection

c.regular income from securities in the trust

d.frequent portfolio rebalancing

 

43. Hedge funds often seek to take advantage of market inefficiencies such as:

a.high transaction costs.

b.pricing differentials between derivative contracts and the underlying security.

c.technological developments aiding informational efficiencies.

d.similar prices in different geographic locations.

 

44.Which of the following is not an advantage of exchange-traded funds?

a.tax advantage

b.high return; low risk

c.low expense ratio

d.ease of buying and selling

 

45. 12b-1 fees help mutual funds pay for

a.marketing expenses

b.costs of trading securities

c.management salaries

d.account maintenance costs

 

46.Which one of the following is true about marketing expenses or “12b-1” fees?

a.are subtracted from funds assets each year.

b.can be a maximum of 1% of average net assets per year.

c.increase with higher portfolio turnover (commissions)

d.All of the above is true.

 

47.Which of the following is not true of REITs?

a.REITs total assets started growing in 1974 and peaked in 1984.

b.FREITs have a fixed life.

c.A real estate recession caused many REIT failures.

d.REITs rebounded with low interest rates and real estate revival of 1984 and low interest rate periods.

 

48.Closed-end funds can sell at a discount to their NAV for which of the following reasons?

a.poor management

b.tax considerations

c.market demand

d.both b and c

e.all of the above

 

49.Which one of the following is true about bond income funds?

a.They invest in bonds that provide steady coupon cash flows and are quite varied in their risk level. 

b.They could be made up of a portfolio of entirely corporate bonds (risky) or a portfolio of entirely Treasury issues (no default risk) or of mortgage-backed               securities.

c.They may be exposed not only to default risk, but also to interest rate risk.

d.They are attractive to investors close to retirement age as the income stream of fund’s instruments provides them with necessary income.

e.All of the above are true.

 

50.Which one of the following is not true about balanced funds?

a.Such funds are portfolios of mortgage securities and preferred stock.

b.The proportions of stocks and bonds determine the level of return for each fund. 

c.They typically generate a higher proportion of income than growth and income funds and are less volatile.

d.Investors who have a few more years to retirement and are typically in their early 50s are attracted to such funds.

 

 

 

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