Q1) Investors use mutual funds for which of the following reasons?

I. To accumulate wealth

II. To minimize risk

III. As a speculative vehicle

IV. To preserve wealth

Select one or more:

a. I and II only

b. I, II, III and IV

c. II, III and Iv only

d. I, II and IV only

Q2) Which of the following characteristics apply to exchange traded funds (ETFs)?

I. Unlimited number of outstanding shares

II. Typically track the performance of some index

III. Market prices may be higher or lower than NAV

IV. May invest in the whole index or use a sample of securities to track the index as closely as possible

Select one or more:

a. I and II only

b. II and III only

c. I, II and III only

d. I, II and IV

Q3) Jack purchased a close end mutual fund that was trading at $82 and had an NAV of $79. Jack sold the fund when the Nav was $92 and the market price was $89. The fund paid $2 in dividends over the period. What is Jack's holding period return?

a. 11%

b. 19%

c. 10%

d. 15%

Q4) Rhys is a risk-averse investor. Nigel is a less risk-averse investor than Rhys. Therefore,

Select one or more:

a. For more same level of risk, Nigel requires a higher rate of return than Rhys

b. For the same risk, Rhys requires a lower rate of return than Nigel

c. For the same return, Rhys tolerates higher risk than Nigel

d. For the same return, Nigel tolerates higher risk than Rhys

e. Cannot be determined

Q5) The capital market line

I. Is a special case of the capital allocation line

II. Represents the opportunity set of a passive investment strategy

III. Has the one month T-bill as its intercept

Iv. Uses broad index of common stocks as its risk portfolio

Select one or more:

a. I, II and III only

b. I, III and IV only

c. II, III and IV onlt

d. III and IV only

e. I, II, III and IV

Q6) When the rate of return is equal to the discount rate

a. the cost of an investment equals the sum of its benefits

b. the cost of an investment equal the future value of its benefits

c. the cost of an investment equal the present value of its benefits

d. the present value of an investment's benefits must be greater than its cost