Institutions and Sources of Funding Flashcards
Which of the following statements regarding mutual funds is false?
A. For tax purposes, as long as all income is distributed to shareholders, the income is treated as passed through to the investor.
B. They are close-end investment companies.
C. Some of the costs of investing in mutual funds include front-end loads, back-end loads and operating expenses.
D. The fund’s prospectus describes the mutual fund’s investment policy.
B
Which of the following statements regarding mutual funds is false?
A. Vangard 500 Index Fund invests primarily in stock of companies outside the United States.
B. They open-end investment companies.
C. They have a specified investment policy described in the fund’s prospectus.
D. They are assessed management fees which reduce the investor’s rate of return.
A
Which of the following statements regarding hedge funds is true?
A. Hedge funds are registered as mutual funds.
B. Hedge funds are heavily regulated.
C. Hedge funds allow private investors to pool assets to be invested by a fund manager.
D. Hedge funds are subject to SEC regulation.
C
Which of the following statements regarding exchange-traded funds (ETFs) is false?
A. Unlike conventional mutual funds, ETFs trade continuously.
B. ETFs allow investors to trade index portfolios.
C. ETFs are typically cheaper than mutual funds.
D. ETFs cannot be sold short or purchased on the margin.
D
Which of the following statements regarding pension funds is false?
A. Contributions to the fund by either employee or employer are tax-deductible.
B. Distributions of the fund to the employee are taxed as ordinary income.
C. Investment income of the pension fund is taxed.
D. In a defined contribution pension plan the contributions are specified but not the benefits.
C
Which of the following statements regarding mutual funds is false?
A. Money market funds invest in stock.
B. Bond funds specialize in the fixed-income sector.
C. Index funds try to match the performance of a broad market index.
D. International funds invest in securities located outside the United States.
A
