Professional Documents
Culture Documents
1.Whichoneofthefollowinginvestsinaportfoliothatisfixedforthelifeofthefund?
A.Mutualfund
B.Moneymarketfund
C.Managedinvestmentcompany
D.Unitinvestmenttrust
BodieChapter04#1
Difficulty:Easy
2.______arepartnershipsofinvestorswithportfoliosthatarelargerthanmostindividualinvestorsbutarestill
toosmalltowarrantmanagingonaseparatebasis.
A.Commingledfunds
B.Closedendfunds
C.REITs
D.Mutualfunds
BodieChapter04#2
Difficulty:Easy
3.A__________isaprivateinvestmentpoolopenonlytowealthyorinstitutionalinvestorsthatisexemptfrom
SECregulationandcanthereforepursuemorespeculativepoliciesthanmutualfunds.
A.commingledpool
B.unittrust
C.hedgefund
D.moneymarketfund
BodieChapter04#3
Difficulty:Easy
4.Advantagesofinvestmentcompaniestoinvestorsincludeallbutwhichoneofthefollowing?
A.Recordkeepingandadministration
B.Lowcostdiversification
C.Professionalmanagement
D.Guaranteedratesofreturn
BodieChapter04#4
Difficulty:Easy
5.Whichofthefollowingtypicallyemploysignificantamountsofleverage?
I.Hedgefunds
II.REITs
III.Moneymarketfunds
IV.Equitymutualfunds
A.IandIIonly
B.IIandIIIonly
C.IIIandIVonly
D.I,IIandIIIonly
BodieChapter04#5
Difficulty:Medium
6.TheNAVofwhichfundsisfixedat$1pershare?
A.Equityfunds
B.Moneymarketfunds
C.Fixedincomefunds
D.Commingledfunds
BodieChapter04#6
Difficulty:Easy
7.ThetwoprincipaltypesofREITsareequitytrustswhich_______________andmortgagetrustswhich
_______________.
A.investdirectlyinrealestate;investinmortgageandconstructionloans
B.investinmortgageandconstructionloans;investdirectlyinrealestate
C.useextensiveleverage;distributelessthan95%ofincometoshareholders
D.distributelessthan95%ofincometoshareholders;useextensiveleverage
BodieChapter04#7
Difficulty:Medium
8.Acontingentdeferredsaleschargeiscommonlycalleda____.
A.frontendload
B.backendload
C.12b1charge
D.topendsalescommission
BodieChapter04#8
Difficulty:Easy
9.IntheU.S.thereareapproximately_______mutualfundsofferedbylessthan_______fundfamilies.
A.12,000;600
B.7,000;100
C.8,000;500
D.9,000;300
BodieChapter04#9
Difficulty:Medium
10.In1999,theSECestablishedrulesthatshouldmakeamutualfundprospectus_______.
A.easiertoreadandunderstand
B.muchmoredetailed
C.disappearoverthenext10years
D.irrelevanttoinvestors
BodieChapter04#10
Difficulty:Easy
11.Mutualfundsprovidethefollowingfortheirshareholders:
A.Diversification
B.Professionalmanagement
C.Recordkeepingandadministration
D.Mutualfundsprovidediversification,professionalmanagement,andrecordkeepingandadministration
BodieChapter04#11
Difficulty:Easy
12.Theaveragematurityoffundinvestmentsinamoneymarketmutualfundis_______.
A.slightlymorethanonemonth
B.slightlymorethanoneyear
C.about9months
D.between2and3years
BodieChapter04#12
Difficulty:Easy
13.Rankthefollowingfundcategoryfrommostriskytoleastrisky.
I.Equitygrowthfund
II.Balancedfund
III.Sectorfund
IV.Moneymarketfund
A.IV,I,III,II
B.III,II,IV,I
C.I,II,III,IV
D.III,I,II,IV
BodieChapter04#13
Difficulty:Medium
14.Whichofthefollowingresultinataxableeventforinvestors?
I.Shorttermcapitalgainsdistributionsfromthefund
II.Dividenddistributionsfromthefund
III.Longtermcapitalgainsdistributionsfromthefund
A.Ionly
B.IIonly
C.IandIIonly
D.I,IIandIII
BodieChapter04#14
Difficulty:Easy
15.Thetypeofmutualfundthatprimarilyengagesinmarkettimingiscalleda/an_______.
A.sectorfund
B.indexfund
C.ETF
D.assetallocationfund
BodieChapter04#15
Difficulty:Medium
16.Asof2008,approximately_____ofmutualfundassetswereinvestedinequityfunds.
A.5%
B.54%
C.30%
D.12%
BodieChapter04#16
Difficulty:Easy
17.Asof2008,approximately_____ofmutualfundassetswereinvestedinbondfunds.
A.14%
B.19%
C.37%
D.47%
BodieChapter04#17
Difficulty:Easy
18.Asof2008,approximately_____ofmutualfundassetswereinvestedinmoneymarketfunds.
A.5%
B.26%
C.44%
D.66%
BodieChapter04#18
Difficulty:Easy
19.Managementfeesforopenendandclosedendfunds,typicallyrangebetween_____and_____.
A.0.2%;1.5%
B.0.5%;5%
C.2%;5%
D.3%;8%
BodieChapter04#19
Difficulty:Easy
20.Theprimarymeasurementunitusedforassessingthevalueofone'sstakeinaninvestmentcompanyis
___________________.
A.NetAssetValue
B.AverageAssetValue
C.GrossAssetValue
D.TotalAssetValue
BodieChapter04#20
Difficulty:Easy
21.NetAssetValueisdefinedas________________________.
A.bookvalueofassetsdividedbysharesoutstanding
B.bookvalueofassetsminusliabilitiesdividedbysharesoutstanding
C.marketvalueofassetsdividedbysharesoutstanding
D.marketvalueofassetsminusliabilitiesdividedbysharesoutstanding
BodieChapter04#21
Difficulty:Easy
22.Assumethatyouhavejustpurchasedsomesharesinaninvestmentcompanyreporting$500millionin
assets,$50millioninliabilities,and50millionsharesoutstanding.WhatistheNetAssetValue(NAV)ofthese
shares?
A.$12.00
B.$9.00
C.$10.00
D.$1.00
BodieChapter04#22
Difficulty:Easy
23.Assumethatyouhaverecentlypurchased100sharesinaninvestmentcompany.Uponexaminingthe
balancesheet,younotethefirmisreporting$225millioninassets,$30millioninliabilities,and10million
sharesoutstanding.WhatistheNetAssetValue(NAV)oftheseshares?
A.$25.50
B.$22.50
C.$19.50
D.$1.95
BodieChapter04#23
Difficulty:Easy
24.TheVanguard500IndexFundtrackstheperformanceoftheS&P500.Todosothefundbuyssharesin
eachS&P500company__________.
A.inproportiontothemarketvalueweightofthefirm'sequityintheS&P500
B.inproportiontothepriceweightofthestockintheS&P500
C.bypurchasinganequalnumberofsharesofeachstockintheS&P500
D.bypurchasinganequaldollaramountofsharesofeachstockintheS&P500
BodieChapter04#24
Difficulty:Easy
25.Whichofthefollowingisnotatypeofmanagedinvestmentcompany?
A.Unitinvestmenttrusts
B.Closedendfunds
C.Openendfunds
D.Hedgefunds
BodieChapter04#25
Difficulty:Easy
26.Whichofthefollowingfundsinvestinstocksoffastgrowingcompanies?
A.Balancedfunds
B.Growthequityfunds
C.REITs
D.Equityincomefunds
BodieChapter04#26
Difficulty:Easy
27.Afundthatinvestsinsecuritiesworldwide,includingtheUnitedStatesiscalleda/an______.
A.internationalfund
B.emergingmarketfund
C.globalfund
D.regionalfund
BodieChapter04#27
Difficulty:Easy
28.Thegreatestpercentageofmutualfundassetsareinvestedin________.
A.bondfunds
B.equityfunds
C.hybridfunds
D.moneymarketfunds
BodieChapter04#28
Difficulty:Easy
29.Sponsorsofunitinvestmenttrustsearnaprofitby___________________.
A.deductingmanagementfeesfromfundassets
B.deductingapercentageofanygainsinassetvalue
C.sellingsharesinthetrustatapremiumtothecostofacquiringtheunderlyingassets
D.chargingportfolioturnoverfees
BodieChapter04#29
Difficulty:Easy
30.Investorswhowishtoliquidatetheirholdingsinaunitinvestmenttrustmay___________________.
A.selltheirsharesbacktothetrusteeatadiscount
B.selltheirsharesbacktothetrusteeatnetassetvalue
C.selltheirsharesontheopenmarket
D.selltheirsharesatapremiumtonetassetvalue
BodieChapter04#30
Difficulty:Easy
31.Investorswhowishtoliquidatetheirholdingsinaclosedendfundmay___________________.
A.selltheirsharesbacktothefundatadiscountiftheywish
B.selltheirsharesbacktothefundatnetassetvalue
C.selltheirsharesontheopenmarket
D.selltheirsharesatapremiumtonetassetvalueiftheywish
BodieChapter04#31
Difficulty:Easy
32.__________fundisdefinedasonewherethefundchargesasalescommissiontoeitherbuyintoorexitthe
fund.
A.Aload
B.Anoload
C.Anindex
D.Aspecializedsectorfund
BodieChapter04#32
Difficulty:Easy
33.__________isafalsestatementregardingopenendmutualfunds.
A.Theyofferinvestorsaguaranteedrateofreturn
B.Theyofferinvestorsawelldiversifiedportfolio
C.Theyredeemsharesattheirnetassetvalue
D.Theyofferlowcostdiversification
BodieChapter04#33
Difficulty:Easy
34.__________fundsstandreadytoredeemorissuesharesattheirnetassetvalue.
A.Closedend
B.Index
C.Openend
D.Hedge
BodieChapter04#34
Difficulty:Easy
35.Revenuesharingwithrespecttomutualfundsrefersto_________.
A.fundcompaniespayingbrokersifthebrokerrecommendsthefundtoinvestors
B.allowingcertainclassesofinvestorstoengageinmarkettiming
C.chargingloadstonewinvestorsinamutualfund
D.directlymarketingfundsovertheInternet
BodieChapter04#35
Difficulty:Easy
36.Higherportfolioturnover
I.resultsingreatertaxliabilityforinvestors
II.resultsingreatertradingcostsforthefund,whichinvestorshavetopayfor
III.isacharacteristicofassetallocationfunds
A.Ionly
B.IIonly
C.IandIIonly
D.I,IIandIII
BodieChapter04#36
Difficulty:Medium
10
37.Lowloadmutualfundshavefrontendloadsofnomorethan_____.
A.2%
B.3%
C.4%
D.5%
BodieChapter04#37
Difficulty:Easy
38.Mostrealestateinvestmenttrusts(REITs)haveadebtratioofaround_________.
A.10%
B.30%
C.50%
D.70%
BodieChapter04#38
Difficulty:Easy
39.Measuredbyassets,about_____offundsaremoneymarketfunds.
A.15%
B.25%
C.40%
D.60%
BodieChapter04#39
Difficulty:Easy
40.Whichofthefollowingisnotatypeofrealestateinvestmenttrust?
I.Equitytrust
II.Debttrust
III.Mortgagetrust
IV.Unittrust
A.IandIIonly
B.IIonly
C.IIandIVonly
D.I,IIandIII
BodieChapter04#40
Difficulty:Easy
11
41.______________________areoftencalledmutualfunds.
A.Unitinvestmenttrusts
B.Openendinvestmentcompanies
C.Closedendinvestmentcompanies
D.REITs
BodieChapter04#41
Difficulty:Easy
42.Mutualfundsaccountforroughly______percentofinvestmentcompanyassets.
A.30
B.50
C.70
D.90
BodieChapter04#42
Difficulty:Easy
43.Anofficialdescriptionofaparticularmutualfund'splannedinvestmentpolicycanbefoundinthefund's
_____________.
A.prospectus
B.indenture
C.investmentstatement
D.12b1forms
BodieChapter04#43
Difficulty:Easy
44.Mutualfundsthatholdbothequitiesandfixedincomesecuritiesinrelativelystableproportionsarecalled
____________________.
A.incomefunds
B.balancedfunds
C.assetallocationfunds
D.indexfunds
BodieChapter04#44
Difficulty:Easy
12
45.Mutualfundsthatvarytheproportionsoffundsinvestedinparticularmarketsectorsaccordingtothefund
manager'sforecastoftheperformanceofthatmarketsector,arecalled____________________.
A.assetallocationfunds
B.balancedfunds
C.indexfunds
D.incomefunds
BodieChapter04#45
Difficulty:Easy
46.Specializedsectorfundsconcentratetheirinvestmentsin_________________.
A.bondsofaparticularmaturity
B.geographicalsegmentsoftherealestatemarket
C.governmentsecurities
D.securitiesissuedbyfirmsinaparticularindustry
BodieChapter04#46
Difficulty:Easy
47.Ifamutualfundhasmultipleclassshares,whichclasstypicallyhasafrontendload?
A.ClassA
B.ClassB
C.ClassC
D.ClassD
BodieChapter04#47
Difficulty:Medium
48.Thecommission,orfrontendload,paidwhenyoupurchasesharesinmutualfunds,maynotexceed
__________.
A.3%
B.6%
C.8.5%
D.10%
BodieChapter04#48
Difficulty:Easy
13
49.Youareconsideringinvestinginoneofseveralmutualfunds.Allthefundsunderconsiderationhave
variouscombinationsoffrontendandbackendloadsand/or12b1fees.Thelongeryouplanonremainingin
thefundyouchoose,themorelikelyyouwillpreferafundwitha__________ratherthana__________,
everythingelseequal.
A.12b1fee;frontendload
B.frontendload;12b1fee
C.backendload,frontendload
D.12b1fee;backendload
BodieChapter04#49
Difficulty:Medium
50.UnderSECrules,themanagersofcertainfundsareallowedtodeductchargesforadvertising,brokerage
commissions,andothersalesexpenses,directlyfromthefundassetsratherthanbillinginvestors.Thesefeesare
knownas____________.
A.directoperatingexpenses
B.backendloads
C.12b1charges
D.frontendloads
BodieChapter04#50
Difficulty:Easy
51.In2000,theSECinstitutednewrulesthatrequirefundstodisclose_____.
A.12b1fees
B.thetaximpactofportfolioturnover
C.frontendloads
D.backendloads
BodieChapter04#51
Difficulty:Medium
14
52.SECrule12b1allowsmanagersofcertainfundstodeduct__________expensesfromfundassets,
however,theseexpensesmaynotexceed__________ofthefund'saveragenetassetsperyear.
A.marketing;1%
B.marketing;5%
C.administrative;0.5%
D.administrative;2%
BodieChapter04#52
Difficulty:Easy
53.Consideramutualfundwith$300millioninassetsatthestartoftheyear,and12millionshares
outstanding.Ifthegrossreturnonassetsis18%andthetotalexpenseratiois2%oftheyearendvalue,whatis
therateofreturnonthefund?
A.15.64%
B.16.00%
C.17.25%
D.17.50%
BodieChapter04#53
Difficulty:Hard
15
54.Consideranoloadmutualfundwith$200millioninassetsand10millionsharesatthestartoftheyear,and
$250millioninassetsand11millionsharesattheendoftheyear.Duringtheyearinvestorshavereceived
incomedistributionsof$2pershare,andcapitalgainsdistributionsof$0.25pershare.Assumingthatthefund
carriesnodebt,andthatthetotalexpenseratiois1%,whatistherateofreturnonthefund?
A.36.25%
B.24.90%
C.23.85%
D.Thereisnotsufficientinformationtoanswerthisquestion
Sincethisisanoloadfund,allchargesarealreadyembeddedingrossreturn.Thus,grossreturnandnetreturn
arethesame.
BodieChapter04#54
Difficulty:Medium
55.Consideranoloadmutualfundwith$400millioninassets,50millionindebt,and15millionsharesatthe
startoftheyear;and$500millioninassets,40millionindebt,and18millionsharesattheendoftheyear.
Duringtheyearinvestorshavereceivedincomedistributionsof$0.50pershare,andcapitalgainsdistributions
of$0.30pershare.Assumingthatthefundcarriesnodebt,andthatthetotalexpenseratiois0.75%,whatisthe
rateofreturnonthefund?
A.12.09%
B.12.99%
C.8.25%
D.Thereisnotsufficientinformationtoanswerthisquestion
Sincethisisanoloadfund,allchargesarealreadyembeddedingrossreturn.Thus,grossreturnandnetreturn
arethesame.
BodieChapter04#55
Difficulty:Hard
16
56.Mutualfundreturnsmaybegrantedpassthroughstatus,if_________________.
A.atleast90percentofallincomeisdistributedtoshareholders
B.atleast30percentoffundincomeisderivedfromsaleofsecuritiesheldforlessthan3months
C.certaindiversificationcriteriaaremet
D.Allofthesemustbetrueforpassthroughstatustobegranted
BodieChapter04#56
Difficulty:Easy
57.A/an_____isanexampleofanexchangetradedfund.
A.SPDRorspider
B.samurai
C.Vanguard
D.openendfund
BodieChapter04#57
Difficulty:Medium
58.Ifyouplaceanordertobuyorsellashareofamutualfundduringthetradingdaytheorderwillbe
executedat
A.theNAVcalculatedatthemarketcloseat4:00pmNewYorktime.
B.therealtimeNAV.
C.theNAVdelayed15minutes.
D.theNAVcalculatedattheopenofthenextday'strading.
BodieChapter04#58
Difficulty:Medium
59.Withrespecttomutualfunds,latetradingreferstothepracticeof________.
A.tradingafterthecloseofU.S.marketsbutbeforeoverseasmarketshaveclosed
B.tradingafterthecloseofoverseasmarkets,butbeforeU.S.marketshaveclosed
C.acceptingbuyorsellordersafterthemarketclosesandNAVhasalreadybeendeterminedfortheday
D.payingcapitalgainsdistributionstocertaininvestorsonlyafterpayingprivilegedinvestorsfirst
BodieChapter04#59
Difficulty:Easy
17
60.Inthe1970study,Malkielfoundthatmutualfundsthatdowellinoneperiod,haveanapproximately
________chanceofdoingwellinthesubsequentearperiod.
A.33%
B.52%
C.65%
D.85%
BodieChapter04#60
Difficulty:Medium
61.Inarecentstudy,Malkielfindsthatevidenceofpersistenceintheperformanceofmutualfunds,
________________inthe1980s.
A.growsstronger
B.remainsaboutthesame
C.becomesslightlyweaker
D.virtuallydisappears
BodieChapter04#61
Difficulty:Easy
62.Theratiooftradingactivityofaportfoliototheassetsoftheportfolio,iscalled____________.
A.thereinvestmentratio
B.thetradingrate
C.theportfolioturnover
D.thetaxyield
BodieChapter04#62
Difficulty:Easy
63.WhichofthefollowingETFstrackstheS&P500index?
A.Qubes
B.Diamonds
C.Vipers
D.Spiders
BodieChapter04#63
Difficulty:Medium
18
64.TheStoneHarborFundisaclosedendinvestmentcompanywithaportfoliocurrentlyworth$300million.
Ithasliabilitiesof$5millionand9millionsharesoutstanding.Ifthefundsellsfor$30ashare,whatisits
premiumordiscountasapercentofNAV?
A.9.26%premium
B.8.47%premium
C.9.26%discount
D.8.47%discount
NAV=($300,000,000$5,000,000)/9,000,000=$32.78
Discount=$32.78$30=$2.78
BodieChapter04#64
Difficulty:Hard
65.Thedifferencebetweenbalancedfundsandassetallocationfundsisthat_____.
A.balancedfundsinvestinbondswhileassetallocationfundsdonot
B.assetallocationfundsinvestinbondswhilebalancedfundsdonot
C.balancedfundshaverelativelystableproportionsofstocksandbondswhiletheproportionsmayvary
dramaticallyforassetallocationfunds
D.balancedfundsmakenocapitalgainsdistributionsandassetallocationfundsmakebothdividendandcapital
gainsdistributions
BodieChapter04#65
Difficulty:Easy
19
66.TheWildwoodFundsellsClassAshareswithafrontendloadof5%andClassBShareswitha12b1fees
of1%annually.Ifyouplantosellthefundafter4years,areClassAorClassBsharesthebetterchoice?
Assumea10%annualreturnnetofexpenses.
A.ClassA
B.ClassB
C.Thereisnodifference.
D.Thereisinsufficientinformationgiven.
BodieChapter04#66
Difficulty:Medium
67.Amutualfundhastotalassetsoutstandingof$69million.Duringtheyearthefundboughtandsoldassets
equalto$17.25million.Thisfund'sturnoverratewas_____.
A.25.00%
B.28.50%
C.18.63%
D.33.40%
$17.25/$69=25.00%
BodieChapter04#67
Difficulty:Easy
68.Whichtypeofinvestmentfundiscommonlyknowntoinvestinoptionsandfuturesinlargescale?
A.Commingledfunds
B.Hedgefunds
C.ETFs
D.REITS
BodieChapter04#68
Difficulty:Easy
20
69.AdvantagesofETFsovermutualfundsincludeallbutwhichoneofthefollowing?
A.ETFstradecontinuouslysoinvestorscantradethroughouttheday
B.ETFscanbesoldshortorpurchasedonmargin,unlikefundshares
C.ETFprovidersdonothavetosellholdingstofundredemptions
D.ETFvaluescandivergefromNAV
BodieChapter04#69
Difficulty:Medium
70.Haroldhasjusttakenhiscompanypublicandownsalargequantityofrestrictedstock.Forpurposesof
diversification,whatfundmighthehelpcreateinordertodiversifyhisholdings?
A.Commingledfunds
B.Hedgefunds
C.ETF
D.REITs
BodieChapter04#70
Difficulty:Medium
71.Whichofthefollowingfundsismostlikelytohaveadebtratioof70%orhigher?
A.Bondfund
B.Commingledfund
C.Mortgagebackedsecurities
D.REIT
BodieChapter04#71
Difficulty:Easy
72.About_________ofmutualfundassetsareinvestedinnoloadfunds.
A.33%
B.40%
C.50%
D.65%
BodieChapter04#72
Difficulty:Medium
21
73.From1971to2007theaveragereturnontheWilshire5000indexwas_________thereturnoftheaverage
mutualfund.
A.identicalto
B.1%higherthan
C.1%lowerthan
D.3%lowerthan
BodieChapter04#73
Difficulty:Hard
74.AnopenendfundhasaNAVof$16.50pershare.Thefundchargesa6%load.Whatistheofferingprice?
A.$14.57
B.$15.95
C.$17.55
D.$16.49
BodieChapter04#74
Difficulty:Medium
75.Theofferpriceofanopenendfundis$18.00andthefundissoldwithafrontendloadof5%?Whatisthe
fund'sNAV?
A.$18.74
B.$17.10
C.$15.40
D.$16.57
($18.00)(10.05)=$17.10
BodieChapter04#75
Difficulty:Medium
22
76.Amutualfundhas$50millioninassetsatthebeginningoftheyearand1millionsharesoutstanding
throughouttheyear.Throughouttheyearassetsgrowat12%.Thefundimposesa12b1feeonallsharesequal
to1%.Thefeeisimposedonyearendassetvalues.IftherearenodistributionswhatistheendofyearNAVfor
thefund?
A.$50.00
B.$55.44
C.$56.12
D.$54.55
BodieChapter04#76
Difficulty:Hard
77.Theassetsofamutualfundare$25million.Theliabilitiesare$4million.Ifthefundhas700,000shares
outstandingandpaysa$3dividend,whatisthedividendyield?
A.5%
B.10%
C.15%
D.20%
Pricepershare=(25million4million)/700,000=30pershare
Dividendyield=3/30=10%
BodieChapter04#77
Difficulty:Medium
78.Whichofthefollowingfundsareusuallymosttaxefficient?
A.Equityfunds
B.BondFunds
C.ETFs
D.Specializedsectorfunds
BodieChapter04#78
Difficulty:Medium
23
79.Youinvestinamutualfundthatchargesa3%frontendload,1%totalannualfees,anda2%backendload,
whichdecreases0.5%peryear.Howmuchwillyoupayinfeesona$10,000investmentthatdoesnotgrow,if
youcashoutafterthreeyearsofnogain?
A.103
B.219
C.553
D.635
totalfees=10,000(10,000x.97)x(.99)x(.99)x(.99)x(.995)=635
BodieChapter04#79
Difficulty:Hard
80.Youinvestinamutualfundthatchargesa3%frontendload,1%totalannualfees,anda0%backendload
onClassAshares.Thesamefundcharges0%frontendload,1%totalannualfees,anda2%backendloadon
ClassBshares.WhatarethetotalfeesinyearoneonaClassAinvestmentof$20,000withnogrowthin
value?
A.658
B.794
C.885
D.902
Firstyearfees=20,000(20,000x.97x.99)=794
BodieChapter04#80
Difficulty:Medium
81.Youinvestinamutualfundthatchargesa3%frontendload,1%totalannualfees,anda0%backendload
onClassAshares.Thesamefundcharges0%frontendload,1%totalannualfees,anda2%backendloadon
ClassBshares.WhatarethetotalfeesinyearoneonaClassBinvestmentof$20,000ifyouredeemshares
withnogrowthinvalue?
A.596
B.794
C.885
D.902
Totalfeesafteroneyear=20,000(20,000x0.98x0.99)=596
BodieChapter04#81
Difficulty:Medium
24
82.Youpay$21,600totheLaramieFundwhichhasaNAVof$18.00pershareatthebeginningoftheyear.
Thefunddeductedafrontendloadof4%.Thesecuritiesinthefundincreasedinvalueby10%duringtheyear.
Thefund'sexpenseratiois1.3%andisdeductedfromyearendassetvalues.Whatisyourrateofreturnonthe
fundifyousellyoursharesattheendoftheyear?
A.4.35%
B.4.23%
C.6.45%
D.5.63%
BodieChapter04#82
Difficulty:Hard
83.Whichoneofthefollowingstatementsaboutreturnsreportedbymutualfundsisnotcorrect?
A.Reportedreturnsarenetofmanagementexpenses
B.Reportedreturnsarenetof12b1fees
C.Reportedreturnsarenetofbrokeragefeespaidonthefund'stradingactivity
D.Reportedreturnsarenetofloadcharges
BodieChapter04#83
Difficulty:Medium
84.ThetopMorningstarmutualfundperformanceratingis________.
A.fivestars
B.fourstars
C.threestars
D.twostars
BodieChapter04#84
Difficulty:Easy
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85.Youareconsideringinvestinginanoloadmutualfundwithanannualexpenseratioof0.6%andanannual
12b1feeof0.75%.YoucouldalsoinvestinabankCDpaying6.5%peryear.Whatminimumannualrateof
returnmustthefundearntomakeyoubetteroffinthefundthanintheCD?
A.7.10%
B.7.45%
C.7.25%
D.7.85%
r>6.5+0.06+0.075=7.85%
BodieChapter04#85
Difficulty:Medium
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