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Investments, 4th Canadian Edition, 4/e

Zvi Bodie, Boston University School of Management
Alex Kane, University of California, San Diego
Alan Marcus, Boston College
Stylianos Perrakis, Concordia University
Peter Ryan, University of Ottawa

Mutual Funds and The Institutional Environment

Multiple Choice Quiz

Prepared by William Lim, University of New Brunswick.


1	Which one of the following statements regarding open-end mutual funds is FALSE?
		A)	(A) The funds offer investors professional management
		B)	(B) The funds do not offer investors a guaranteed rate of return
		C)	(C) The funds redeem shares at gross asset value
		D)	B and C
		E)	A and B


2	Funds designed to be candidates for an individual's entire investment portfolio are called
		A)	balanced funds
		B)	equity index funds
		C)	growth funds
		D)	money market funds
		E)	sector funds


3	Which of the following functions do mutual fund companies perform for their investors?
		A)	Record keeping and administration
		B)	Professional management
		C)	Diversification and divisibility
		D)	Lower transaction costs
		E)	All of the above


4	An integrated pension plan combines which of the following: defined benefit plan defined contribution plan Canada Pension Plan (CPP)
		A)	A and B
		B)	A and C
		C)	B and C
		D)	A, B and C
		E)	None of the above


5	At issue, offering prices of open-end funds will typically be
		A)	less than NAV due to limited demand
		B)	greater than NAV due to greater demand
		C)	less than NAV due to loads and commissions
		D)	greater than NAV due to loads and commissions
		E)	less than or greater than NAV with no apparent pattern


6	Multiple Mutual Fund had year-end assets of $367 million and liabilities of $15 million. There were 36,400,000 shares in the fund at year end. What was Multiple Mutual's Net Asset Value?
		A)	$18.11
		B)	$18.81
		C)	$69.96
		D)	$9.67
		E)	$181.07


7	Most actively managed mutual funds, when compared to a market index such as the Wilshire 5000,
		A)	beat the market return in all years.
		B)	beat the market return in most years.
		C)	do not outperform the market
		D)	exceed the return on index funds.
		E)	None of the above are correct statements.


8	As of December 31, 2001, which class of mutual funds had the largest amount of assets invested?
		A)	bonds funds
		B)	stock funds
		C)	balanced funds
		D)	money market funds
		E)	mortgage funds


9	The i60 is an example of
		A)	an on-line brokerage firms
		B)	an electronic trading network
		C)	an exchange-traded fund (ETF)
		D)	integrated investing
		E)	a personal computer


10	Couch Potato Furniture purchased 100 shares of Natural Spring mutual fund at a net asset value of $56 per share. During the year Patty received dividend income distributions of $3.00 per share and capital gains distributions of $5.20 per share. At the end of the year the shares had a net asset value of $53 per share. What was Patty's rate of return on this investment?
		A)	5.43%
		B)	9.29%
		C)	7.19%
		D)	12.44%
		E)	9.18%

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