SEC Chapter 18 Questions (F23)

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Select the term associated with mutual funds, ETFs and real estate that corresponds to each of the given descriptions. (Note: These are not necessarily complete definitions, but there is only one possible answer for each description.) Description This refers to a risk management technique where investors collect their money in a fund and then invest the fund into a diversified set of securities This plan is offered by most open-ended funds and allows intors to automatically receive a certain amount of money periodically This is an investment company that allocates investor funds into both income generating property and mortgage loans This is a specific type of real estate investment trust that owns and operates income-producing real This fund limits its investments to short-term, tax-exempt municipal securities Term

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An exchange fund with an objective of investing in stocks considered to be a need versus want by the market is a(n) ______     Balanced Fund     Growth Fund     Value Fund     Index Fund   An Exchange Traded fund with an objective of both growth and income is a(n)      An open-end investment company     Value Fund     Balanced Fund

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You Answered Correct Answer Jensen (1968) E proposed a very influential idea: when assessing mutual fund performance, we should compare funds only after accounting for the risks they take (rather than simply comparing returns). To see his argument, draw a SML, and put one dot above the SML (call it A) and one dot below it (call it B) while A and B have the same beta. (a) Describe the investment opportunities here. Buy B and sell A in a way that the portfolio has zero market beta Buy A and sell B in a way that the portfolio has zero market beta Just buy A to reach the highest possible return

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A3) Finance You are an investor who is looking to invest into a fund. Given the following investment criteria, which fund would be the best fit? You are a long-term investor (less worried about liquidity) You still need some flexibility in being able to purchase/redeem the investment at fair value You prefer a fund that undertakes some tactical asset allocation (changing its strategy based on market conditions) You are comfortable with higher risk. Passively managed, index fund Actively managed, closed-end fund Passively managed, open-ended fund Actively managed, open-ended fund

A money market mutual fund or fund pools money exchange-traded from investors and purchases various money market instruments using those funds. Which of the following would be an appropriate instrument for such a fund that would offer the lowest risk for investors? O A. Preferred stock B. T-notes O C. Common stock D. High-yield bonds

Which of the following best describes an index mutual fund? Mutual fund manager based on preset ratio of stocks and bonds. Mutual fund manage based on a person's anticipated year of retirement.  Passively managed fund design to mimic a specific market. Mutual fund that attempts to earn rates of return that exceed the return of the market.

A mutual fund that aggressively seeks capital growth: # O A. will have an MER that is higher than a global fund. OB. will have an MER that is approximately the same as a T-bill fund. OC. will have an MER that reflects the increased costs of research. OD. will have an MR similar to that of a fixed-income fund.

H3. Show proper step by step calculation

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If you wish to purchase a mutual fund with low annual fees you should collect information on the of the various funds. O a) MER O b) P/E c) EPS O d) beta

How can a mutual fund manager who follows a momentum trading strategy expect to earn above - average return  1. Provided the stock price has been decreasing below the mean reversion point and other investors follow a mean reversion strategy the fund manager is likely to earn an above average return  2. If the fund manager follows a momentum strategy and buys a stock as the price is increasing while other investors follow a mean reversion strategy, then it is likely the stock price will continue to rise  3. Provided the stock price have been rising above the mean reversion point and other investors follow a mean reversion strategy, the fund manager is likely to earn an above average return  4. If the fund manager follows a momentum strategy and buys a stock as the price is increasing and other investors also follow a momentum strategy, then it is likely the stock price will continue to rise

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You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is 0.97. Year 2018 2019 2020 2021 2022 Fund -15.2% 25.1 12.4 6.2 -1.2 Sortino Ratio Market -24.5% 19.5 9.4 7.6 -2.2 Risk-Free 1% 3 2 Fund 4 2 What is the Sortino ratio for the fund and the market? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers rounded to 4 decimal places. h Market

Quiz Instructions Question 1 1 pts A pension fund manager is considering three assets. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill yielding 0.06. Info of the risky funds is as follows: Expected ret. std. dev. Stock fund 0.22 0.27 Bond fund 0.12 0.14 The correlation between the fund returns is 0.5. What is the expected return of the optimal risky portfolio? Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321.

Which of the following is likely to have a price that differs from its NAV?: -open-ended mutual funds -close-ended mutual funds -exchange traded funds -actively managed funds -index funds

Nikul