Questions and Answers of Fundamentals Of Investments Valuation

As of mid-2022, the Fidelity Contrafund had over $110 billion in invested assets, making it one of the larger funds in the world. If the fund had 7.45 billion shares outstanding, what is its net
a. What are some advantages of investing in mutual funds?b. What are some drawbacks of investing in mutual funds?
Which of the following statements typically does not characterize the structure of an investment company?a. An investment company adopts a corporate form of organization.b. An investment company
On a particular day, the Common Sense Growth Fund had a net asset value of $13.91. The offering price was $15.20. Is this a load fund? What is the front-end load?
a. What is an investment company?b. What is the difference between an open-end fund and a closed-end fund?
The Starks Income Fund’s average daily total assets were $100 million for the year just completed. Its stock purchases for the year were $20 million, while its sales were $12.5 million. What was
Which of the following is not part of the expense statement?a. Shareholder transaction expensesb. Shareholder demographic profilec. Annual operating expensesd. A hypothetical example of expenses
Conduct a fund screening to identify the “best” U.S. large-cap value funds.
Suppose a fund had average daily assets of $50 million during a particular year. It bought $80 million worth of stock and sold $70 million during the year. What is its turnover?
Which of the following is the least likely advantage of mutual fund investing?a. Diversificationb. Professional managementc. Convenienced. Mutual fund returns are normally higher than market
Examine the largest positions held by the ETF with the ticker symbol XLY. Is this a diversified set?
An open-end mutual fund is owned by which of the following?a. An investment companyb. An investment advisory firmc. A “family of funds” mutual fund companyd. Its shareholders.
a. What is a money market mutual fund? What are the two types?b. How do money market mutual funds maintain a constant net asset value?
A closed-end fund is owned by which of the following?a. An investment companyb. An investment advisory firmc. A “family of funds” mutual fund companyd. Its shareholders.
Which of the following statements regarding ETFs is false?a. ETFs are funds that can be traded on a stock market.b. ETF investors own shares of the underlying fund sponsor.c. ETF shares can be
Closed-end funds and ETFs have which of the following characteristics in common?a. Shares of both closed-end funds and ETFs trade in the secondary market.b. Both closed-end funds and ETFs stand
Growth, value, large-cap, and small-cap investing are all examples of:a. Style investment strategies.b. Sector investment strategies.c. Index investment strategies.d. Lifestyle investment
When you look at long-run performance for mutual funds, you typically don’t see many poor performers. Why do you suppose they all tend to look so good?
One of the main advantages to investing in a fund of funds (FOF) is that FOFs provide:a. Improved diversification of assets.b. Higher expected returns.c. Lower management fees.d. Higher
Which mutual fund type will most likely incur the smallest tax liability for its investors?a. Index fundb. Municipal bond fundc. Income fundd. Growth fund.
Which mutual fund type will most likely incur the greatest overall risk levels for its investors?a. Large-cap index fundb. Insured municipal bond fundc. Money market mutual fundd. Small-cap
Which of the following mutual fund fees is assessed on an annual basis?a. 12b-1 feesb. Front-end loadc. Back-end loadd. Contingent deferred sales charge (CDSC).
Which of the following mutual fund fees will most likely be the biggest expense for a long-term fund investor?a. 12b-1 feesb. Front-end loadc. Back-end loadd. Contingent deferred sales charge
Which of the following mutual fund fees and expenses is the most difficult for investors to assess?a. Sales charges or “loads”b. 12b-1 feesc. Management feesd. Trading costs.
Which of the following is false?a. DMMs can trade for their own accounts.b. DMMs earn income from providing liquidity.c. On the NYSE, all buy and sell orders are negotiated through a floor
Identify companies set to go public in the near future.
Private equity funds that concentrate in early-stage financing would likely be what type of fund?a. Venture capitalb. Middle marketc. Leveraged buyoutsd. Distressed assets.
You’ve calculated values for an index over a four-year period as follows:Suppose you wanted the index to start at 1,000. What would the reindexed values be? Year 1: Year 2: Year 3: Year 4: 1,687
Examine the performance of world equity indexes for the last trading day.
The compensation constraint that requires private equity fund managers to “give back” performance fees when subsequent losses occur is a(n) _____ provision.a. High-water
Find the current divisor used to calculate the Dow Jones Industrials Average Index (INDU) value.
The divisor for the Dow Jones Industrial Average (DJIA) is most likely to decrease when a stock in the DJIA:a. Has a stock split.b. Has a reverse split.c. Pays a cash dividend.d. Is removed and
Suppose Intel is currently trading at $50. You want to sell it if it reaches $55. What type of order should you submit?
Which of the following activities is not conducted by DMMs on the NYSE?a. Acting as dealers for their own accountsb. Monitoring compliance with margin requirementsc. Providing liquidity to the
What is a securities market characterized by dealers who buy and sell securities for their own inventories called?a. A primary marketb. A reordered marketc. An over-the-counter marketd. An
What is the over-the-counter market for exchange-listed securities called?a. Third marketb. Fourth marketc. After-marketd. Block market.
If the market price of each of the 30 stocks in the Dow Jones Industrial Average changes by the same percentage amount during a given day, which stock will have the greatest impact on the
In calculating the Standard & Poor’s stock price indexes, how are adjustments for stock splits made?a. By adjusting the divisorb. Automatically, due to the manner in which the index is
Which of the following indexes includes the largest number of actively traded stocks?a. The Nasdaq Composite Indexb. The NYSE Composite Indexc. The Wilshire 5000 Indexd. The Value Line Composite
Private equity funds that concentrate in smaller, family-owned companies with established cash flows are typically referred to as:a. Venture capital.b. Middle market.c. Leveraged
The compensation constraint that requires private equity fund managers to meet a particular return target before performance fees can be taken is a(n) _____ provision.a. High-water
Private equity funds will often use convertible preferred stock or bonds with attached call options. These types of securities are used because they:a. Increase the risk of the
Which one of the following statements regarding the Dow Jones Industrial Average is false?a. The DJIA contains 30 well-known large-company stocks.b. The DJIA is affected equally by dollar changes
Suppose the following four stocks are to be combined into a stock index in January 2022 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for their

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