Question 21 of 40

2.5 Points

Investors who accept the random-walk theory should use a __________ plan.

A. dollar-cost averaging
B. constant dollar
C. constant ratio
D. variable ratio
Question 22 of 40	2.5 Points

Information for ABC Fund is:

	Beginning of the Year	End of the Year
NAV	$12.80	$11.64
Market price of the fund shares	$13.05	$9.95
Dividends paid over the year		$0.90
Capital gains distributed over the year		$0.30

The market-based holding period return for ABC Mutual Fund is:

A. -19.1%.
B. -14.6%.
C. 0.3%.
D. 9.4%.
Question 23 of 40	2.5 Points

The S & P 500 Index is an appropriate benchmark for:

A. diversified portfolios of large company stocks.
B. portfolios diversified among several asset classes such as stocks, bonds, and real estate.
C. diversified portfolios with a mix of large, small, and mid-cap stocks.
D. diversified portfolios of mid-cap and small company stocks.
Question 24 of 40	2.5 Points

An investor who wants to use mutual funds as a storehouse of value should invest in __________ funds.

A. high-yield corporate bond funds and growth
B. growth funds and equity-income
C. equity-income funds and long-term bond
D. money funds and short-term bond
Question 25 of 40	2.5 Points

Ten months ago, Junior purchased a stock for $14 a share. The stock pays a quarterly dividend of $0.50 per share. Today, Junior sold the stock for $15 a share. His holding period return is:

A. 10.0%.
B. 10.7%.
C. 16.7%.
D. 17.9%.
Question 26 of 40	2.5 Points

The conversion privilege provided by mutual fund families allows investors to:

A. move from one fund to another without incurring any capital gains tax liability.
B. be more aggressive since they can re-allocate their funds when market conditions change.
C. re-allocate their funds at any time as long as they pay an additional sales load on the transferred funds.
D. move from one fund family to another once every six months.
Question 27 of 40	2.5 Points

Ashley believes that the price of gas and oil is about to rise and energy company profits will follow. She should invest in a/an __________ fund.

A. asset allocation
B. emerging market
C. sector
D. aggressive growth
Question 28 of 40	2.5 Points

Allison's portfolio has an expected return of 14% and a beta of 1.37. Brianna's portfolio has an expected rate of return of 11% and a beta of 1. The risk-free rate is 3%. According to the Treynor measure:

A. Allison has the better portfolio.
B. Brianna has the better portfolio.
C. the portfolios are equally desirable.
D. the answer depends on Allison and Brianna's risk tolerance.
Question 29 of 40	2.5 Points

Investors are generally well-advised to avoid mutual funds with:

A. highly rated fund managers.
B. low fees and high tax efficiency.
C. consistently poor historical performance.
D. good performance in both up and down markets.
Question 30 of 40	2.5 Points

Which of the following best describes the legal organization of mutual funds?

A. Funds are organized as a single entity that handles all functions such as custody and investment decisions.
B. Funds split their basic functions such as record keeping and investment decisions among two or more companies.
C. Funds are owned by the company that manages them.
D. A distributor keeps track of investment and redemption requests from shareholders and maintains other shareholder records
Question 31 of 40	2.5 Points

Two mutual funds are quoted as follows.

Fund A	NAV	17.13	Offer Price	18.18
Fund B	NAV	19.03	Offer Price	19.03

Given these quotes:

A. both funds are load funds.
B. fund A is a no-load fund.
C. fund B is a no-load fund.
D. both funds are no-load funds
Question 32 of 40	2.5 Points

The primary objective of an equity-income fund is:

A. capital gains.
B. current income with capital preservation.
C. potentially high capital gains with limited income.
D. high risk-return trade-offs.
Question 33 of 40	2.5 Points

An investor adopts a policy of investing in both an aggressive mutual fund and a short-term bond fund. When the value of the aggressive fund exceeds 65% of the portfolio value, shares of that fund are sold such that the aggressive fund represents only 45% of the portfolio. This is an example of a __________ plan.

A. constant-dollar
B. dollar-cost averaging
C. constant-ratio
D. variable-ratio
Question 34 of 40	2.5 Points

Investors seeking tax-exempt income should invest in __________ funds.

A. index
B. government bond
C. municipal bond
D. money market
Question 35 of 40	2.5 Points

The net asset value of a mutual fund increased from $12.03 to $13.53, but its price per share increased by only $1.26. This information indicates that the fund:

A. paid out $1 in capital gains.
B. paid out $1 in dividends.
C. is a closed-end fund.
D. is an open-end fund.
Question 36 of 40	2.5 Points

Investors who wish to minimize the effect of taxes on their investment returns should try to avoid:

A. dividend paying stocks.
B. short-term capital gains.
C. long-term capital gains.
D. municipal bonds.
Question 37 of 40	2.5 Points

Investors interested in predictable cash flow from their investments should consider funds that offer:

A. conversion privileges.
B. systematic withdrawal plans.
C. automatic reinvestment plans.
D. automatic investment plans.
Question 38 of 40	2.5 Points

Juan's investment portfolio was valued at $125,640 at the beginning of the year. During the year, Juan received $603 in interest income and $298 in dividend income. Juan also sold shares of stock and realized $1,459 in capital gains. Juan's portfolio is valued at $142,608 at the end of the year. All income and realized gains were reinvested. No funds were contributed or withdrawn during the year. The amount of income Juan must declare this year for income tax purposes is:

A. $0.
B. $901.
C. $2,360.
D. $19,328.
Question 39 of 40	2.5 Points

Asset allocation should focus on:

A. the investor's financial and family situation.
B. selection of individual securities within an asset class.
C. maximization of current income.
D. maximization of short-term profits.
Question 40 of 40	2.5 Points

During the 7-year market cycle of 2006-2012, __________ funds outperformed the market average:

A. a majority of large cap
B. a majority of small cap
C. a majority of asset allocation
D. no category of