CH 4 MID 2 Flashcards
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.
A) closed-end
B) open-end
C) market
D) public
E) hedge
A
9) A fund that is basically an index fund that trades like a closed-end fund is called a(n): A) mutual fund.
B) open-end fund.
C) exchange-traded fund.
D) depository receipt.
E) money market fund.
C
) Which one of the following describes an investment company that generally has an unrestricted investment strategy and is not accessible to the general public?
A) closed-end fund
B) open-end fund
C) exchange-traded fund
D) mutual fund
E) hedge fund
E
Which one of the following statements correctly relates to closed-end funds?
A) Shares in closed-end funds must be held until the funds mature.
B) Once a fund closes, a new investor is unable to purchase shares in that fund.
C) Shares of closed-end funds trade just like stocks.
D) The number of shares outstanding changes on a daily basis as shares are sold and
repurchased.
E) Closed-end funds must sell at the NAV or above.
C
Shares in closed-end funds:
0A) may sell for more or less than the NAV.
B) cannot be resold.
C) are referred to as mutual fund shares.
D) are more popular than shares in open-end funds.
E) can be resold to the fund at any time.
A
The income earned by a regulated investment company is:
A) taxed only at the federal level.
B) taxed only at the state and local level.
C) taxable income for the fund’s shareholders.
D) exempt from all taxation.
E) taxable income for the fund.
C
A fund which tracks the S&P 500 would best be classified as which type of fund?
A) equity income
B) index
C) growth
D) global
E) sector
B
1) Which one of the following characteristics best fits an index fund?
A) market outperformer
B) dividend oriented
C) high expenses
D) passively managed
E) high turnover rate
D
Jack 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 Jack at this time?
A) balanced
B) social conscience
C) high yield
D) aggressive growth
E) sector
A
Besides size, how else does a mutual fund style box classify equity funds?
A) short and long-term rates of return
B) age of the fund
C) cost and fees as a percent of NAV
D) value versus growth characteristics
E) taxability at federal, state, and local levels
D
While reviewing mutual fund reports, Allen noticed that a fund was reported as “closed”. What is the primary reason for closing a fund?
A) the NAV has declined noticeably
B) the fund has grown too large in size
C) the fund is suffering a loss
D) all issued shares have been sold
E) the fund is underperforming its peers
B
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.
A) bond B) index
C) asset allocation
D) global
E) closed-end
E
Which one of the following is a common characteristic of a closed-end fund but not of an open-end fund?
A) discounted price
B) taxable distributions
C) annual fees
D) professional management
E) stated objective
A
f you purchase shares in a closed-end fund at the initial offer price, you should expect to:
A) receive offers to purchase your shares at a premium prior to the official first day of O trading.
B) immediately see a decrease in the value of yourinvestment.
C) realize a capital gain if you sell your shares as soon as trading in the shares
commences.
D) earn an abnormally high rate of return the first year.
E) earn tax-advantaged income.
B
Which one of the following trading symbols is associated with the ETF on the S&P 500
index?
A) DIA
B)QQQQ
C)SPX
D)SPY
E)DIAX
D
