Wealth management exam #2 Questions with Correct Answers Graded A+
Mutual fund expense ratios include all of the following except - Answers Investment losses
Which of the following is not an investment company? - Answers CMO
which of the following statements concerning a unit investment trust is correct? - Answers it has an
unmanaged portfolio
Open-end funds and closed-end funds are similar except for: - Answers Capitalization
Kevin is considering a mutual fund that invests only in technology companies. What is the best term for
this type of fund? - Answers Sector fund
As of the end of 2017, there was more than $18 trillion invested in investment companies - Answers
True
The largest percentage of investment company assets are invested in ETFs. - Answers False
Most investment companies are structured in such a way as to be nontaxable entities - Answers True
UITs are often make a public offering twice per year for each fund - Answers False
UITs are generally passively managed - Answers True
Municipal bond UITs pay out interest and principal as it is received - Answers True
ETF shares can only be sold at the end of the trading day - Answers False
ETFs are generally actively managed - Answers False
One of the advantages of ETFs is the low expense ratios for these funds - Answers True
ETFs could be used to build a diversified portfolio. - Answers True
A closed-end mutual fund rarely trades at NAV - Answers True
There are far more open-end than closed-end mutual funds - Answers True
Shares for both ETFs and closed-end funds are traded on the secondary exchange - Answers True
Front-loads reduce the amount invested - Answers True
12b-1 fees are applied annually, if at all - Answers True
An international equity fund will likely have a higher expense ratio than a domestic money market fund -
Answers True
, A 1% difference in expense ratio can produce substantial difference in overall performance over a long
period - Answers True
A shares are the cheapest in the long run for loaded shares - Answers True
B shares revert to A shares after a number of years - Answers True
Most mutual funds require a minimum investment of at least $10,000. - Answers False
Mutual funds are one of the most efficient ways to achieve diversification with a relatively small
investment - Answers True
Professional management is one of the benefits of mutual funds - Answers True
The management fee charged by mutual funds can be deducted as an itemized deduction subject to the
2% AGI limit. - Answers False
Mutual funds can be sold throughout the trading day. - Answers False
Mutual funds with high turnover are more likely to have more built-in gains than mutual funds with
lower turnover - Answers False
There is more money invested in bond funds than equity funds. - Answers False
Actively managed funds should have higher expense ratios than passively managed funds - Answers True
Market risk is the primary risk for equity mutual funds - Answers True
Portfolio turnover is calculated by dividing total purchase during the year by average daily assets -
Answers False
A difference between A and B shares in the last exhibit is the front-end load of A and the deferred sales
charge of B - Answers True
The A shares have lower 12b-1 fees than B shares in the exhibit - Answers True
Jensen, sharpe, and Treynor use beta as their risk measure - Answers False
Jensen's alpha is an absolute measure of performance - Answers True
The Sharpe ratio and the treynor ratio are both relative measures of performance - Answers True
Two portfolios have the same returns and standard deviations, but Portfolio A has a higher beta than
Portfolio B. Applying the sharpe ratio: - Answers The sharpe ratio for portfolio A is equal to Portfolio B
Maggie is the portfolio manager who consistently obtains a high Sharpe ratio. Her forecasting ability is
which of the following? - Answers Above average
Mutual fund expense ratios include all of the following except - Answers Investment losses
Which of the following is not an investment company? - Answers CMO
which of the following statements concerning a unit investment trust is correct? - Answers it has an
unmanaged portfolio
Open-end funds and closed-end funds are similar except for: - Answers Capitalization
Kevin is considering a mutual fund that invests only in technology companies. What is the best term for
this type of fund? - Answers Sector fund
As of the end of 2017, there was more than $18 trillion invested in investment companies - Answers
True
The largest percentage of investment company assets are invested in ETFs. - Answers False
Most investment companies are structured in such a way as to be nontaxable entities - Answers True
UITs are often make a public offering twice per year for each fund - Answers False
UITs are generally passively managed - Answers True
Municipal bond UITs pay out interest and principal as it is received - Answers True
ETF shares can only be sold at the end of the trading day - Answers False
ETFs are generally actively managed - Answers False
One of the advantages of ETFs is the low expense ratios for these funds - Answers True
ETFs could be used to build a diversified portfolio. - Answers True
A closed-end mutual fund rarely trades at NAV - Answers True
There are far more open-end than closed-end mutual funds - Answers True
Shares for both ETFs and closed-end funds are traded on the secondary exchange - Answers True
Front-loads reduce the amount invested - Answers True
12b-1 fees are applied annually, if at all - Answers True
An international equity fund will likely have a higher expense ratio than a domestic money market fund -
Answers True
, A 1% difference in expense ratio can produce substantial difference in overall performance over a long
period - Answers True
A shares are the cheapest in the long run for loaded shares - Answers True
B shares revert to A shares after a number of years - Answers True
Most mutual funds require a minimum investment of at least $10,000. - Answers False
Mutual funds are one of the most efficient ways to achieve diversification with a relatively small
investment - Answers True
Professional management is one of the benefits of mutual funds - Answers True
The management fee charged by mutual funds can be deducted as an itemized deduction subject to the
2% AGI limit. - Answers False
Mutual funds can be sold throughout the trading day. - Answers False
Mutual funds with high turnover are more likely to have more built-in gains than mutual funds with
lower turnover - Answers False
There is more money invested in bond funds than equity funds. - Answers False
Actively managed funds should have higher expense ratios than passively managed funds - Answers True
Market risk is the primary risk for equity mutual funds - Answers True
Portfolio turnover is calculated by dividing total purchase during the year by average daily assets -
Answers False
A difference between A and B shares in the last exhibit is the front-end load of A and the deferred sales
charge of B - Answers True
The A shares have lower 12b-1 fees than B shares in the exhibit - Answers True
Jensen, sharpe, and Treynor use beta as their risk measure - Answers False
Jensen's alpha is an absolute measure of performance - Answers True
The Sharpe ratio and the treynor ratio are both relative measures of performance - Answers True
Two portfolios have the same returns and standard deviations, but Portfolio A has a higher beta than
Portfolio B. Applying the sharpe ratio: - Answers The sharpe ratio for portfolio A is equal to Portfolio B
Maggie is the portfolio manager who consistently obtains a high Sharpe ratio. Her forecasting ability is
which of the following? - Answers Above average
