Which of the following is a drawback of mutual funds? Question 3Select one: a. Withdrawing funds from a mutual fund is extremely difficult. b. The professional management touted by many funds does not come cheap. c. Most investors do not find a fund that is a good match based on their investment goals. d. There is no scope for financial diversification.
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Question 3Select one:
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- With respect to hedge fund investing, the net return to an investor in a fund of funds would be lower than that earned from an individual hedge fund because of:a. Both the extra layer of fees and the higher liquidity offered.b. No reason; funds of funds earn returns that are equal to those of individual hedge funds.c. The extra layer of fees only.Exchange-traded funds are popular investments that are easy to sell and have the potential to earn significant income for investors. However, they fluctuate wildly in price, increasing the likelihood that an investment fails. This investment features? low risk, low return, and poor liquidity. low risk, high return, and good liquidity. high risk, high return, and poor liquidity. high risk, high return, and good liquidity.1 . Which investor type would most likely have high tolerance for risk, long investment horizon, and low liquidity needs? a) pension funds b) commercial banks c)individuals d) mutual funds 2. Which manager most likely receives the highest compensation through fees? a) passive manager b) fixed income asset manager c) smart beta manager d) alternative asset manager 3. A no-load mutual fund will most likely charge which of the following fee? a) redemption fee b) up front fee c) management fee d) all of the above 4. The diversification between any two assets most likely to occur when which of the following conditions is met? a) Correlation between the two assets is less than 1.0 b) Correlation between the two assets is greater than 1 c) Correlation between the two assets is strictly negative d) Correlation between the two assets is strictly zero 5. When the economy is at the lowest point of the business cycle (the "through"), which are the best industries to invest in? a) Cyclical…
- Mutual funds offer investors a.a lower return for less risk than what the investor could earn on his own. b.a lower return for more risk than what the investor could earn on his own. c.a way for individuals to eliminate the idiosyncratic risk associated with any single investment. d.a greater return for greater risk than what an investor can earn on his own.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 fundOne apparent violation of the Law on One Price is the pervasive discrepancy between the prices and net asset value of closed-end mutual funds. Would you expect to observe greater discrepancies on diversified or less diversified funds? Why?
- Which of the following regarding the investor sentiment theory of the closed end fund puzzle is FALSE? a) Investors in closed end funds are not as important an ownership group in the assets of the funds’ investment portfolios. b) The closed end fund is riskier than the underlying portfolio. c) Arbitrageurs are subject to limits to arbitrage. d) The noise trader risk is diversifiable.Which of the following is FALSE about the differences between ETFs and Mutual Funds? Select one or more: a. ETFs were introduced before Mutual Funds b. Both ETFs and Mutual Funds can be traded just like stocks c. The Mutual Fund Industry is much larger than the ETF industry d. Mutual Funds fees are typically higher than ETF fees.Ñ3
- Which of the following are the MAIN REASONS for an investor to invest in managed funds? I - To obtain a better return. II - To diversify risks. III - Lack of time to look after their own investments. IV - More freedom on stock selection. A) I, II and III only B) I, II and IV only C) I, III and IV only D) II, III and IV onlyD4)How do actively managed funds differ from passively managed funds? A. Managers of actively managed funds use their discretion to buy and sell assets as they attempt to generate higher returns.B. Actively managed funds focus on stocks; passively managed funds focus on bonds.C. Actively managed funds necessarily contain a greater variety of stocks or bonds than does a passively managed fund.D. Actively managed funds consistently outperform passively managed funds