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1、Financial Markets and Institutions, 6e (Mishkin/Eakins)Chapter 21 The Mutual Fund Industry21.1 Multiple Choice1) Mutual funds hold about of financial intermediaries1 total assets.A) one-sixthB) one-fourthC) one-halfD) two-thirdsAnswer: AQuestion Status: Previous Edition2)intermediation means that sm
2、all investors can pool their funds with other investors to purchase high face value securities.A) LiquidityB) FinancialC) DenominationD) ShareAnswer: CQuestion Status: Previous Edition3) Mutual funds offer investors all of the following exceptA) greater-than-average returns.B) diversified portfolios
3、.C) lower transaction costs.D) professional investment management.Answer: AQuestion Status: Previous Edition4) Mutual fundsA) pool the resources of many small investors by selling these investors shares and using the proceeds to buy securities.B) allow small investors to obtain the benefits of lower
4、 transaction costs in purchasing securities.C) provide small investors a diversified portfolio that reduces risk.D) do all of the above.E) do only A and B of the above.Answer: DQuestion Status: Previous Edition5)enables mutual funds to consistently outperform a randomly selected group of stocks.A) M
5、anagerial expertiseB) DiversificationC) Denomination intermediationD) None of the aboveAnswer: DQuestion Status: Previous Edition6) At the end of 2003 there were over separate mutual funds with total assets over*A) 800; $10 trillionB) 8,000; $7 trillionC) 10,000; $10 trillionD) 1,000; $7 trillionAns
6、wer: BQuestion Status: Previous Edition7) Most mutual funds are structured in two ways. The most common structure is a(n) fund, from which shares can be redeemed at any time at a price that is tied to the asset value of the fund. A(n)fund has a fixed number of nonredeemable shares that are traded in
7、 the over-the-counter market.A) closed-end; open-endB) open-end; closed-endC) no-load; closed-endD) no-load; loadE) load; no-loadAnswer: BQuestion Status: Previous Edition8) Which of the following is an advantage to investors of an open-end mutual fund?A) Once all the shares have been sold, the inve
8、stor does not have to put in more money.B) The investors can sell their shares in the over-the-counter market with low transaction fees.C) The fund agrees to redeem shares at any time.D) The market value of the funds shares may be higher than the value of the assets held by the fund.Answer: CQuestio
9、n Status: Previous Edition9) The net asset value of a mutual fund isA) determined by subtracting the funds liabilities from its assets and dividing by the number of shares outstanding.B) determined by calculating the net price of the assets owned by the fund.C) calculated every 15 minutes and used f
10、or transactions occurring during the next 15-minute interval.D) calculated as the difference between the funds assets and its liabilities.Answer: AQuestion Status: Previous Edition10)funds are the simplest type of investment funds to manage.A) BalancedB) Global equityC) GrowthD) IndexAnswer: DQuesti
11、on Status: Previous Edition11) The majority of mutual fund assets are now owned byA) individual investors.B) institutional investors.C) fiduciaries.D) business organizations.E) retirees.Answer: AQuestion Status: Previous Edition12) Capital appreciation funds select stocks of and tend to be risky tha
12、ntotal return funds.A) large established companies that pay dividends regularly; moreB) large established companies that pay dividends regularly; lessC) companies expected to grow rapidly; moreD) companies expected to grow rapidly; lessAnswer: CQuestion Status: Previous Edition13) From largest to sm
13、allest in terms of total assets, the four classes of mutual funds areA) equity funds, bond funds, hybrid funds, money market funds.B) equity funds, money market funds, bond funds, hybrid funds.C) money market funds, equity funds, hybrid funds, bond funds.D) bond funds, money market funds, equity fun
14、ds, hybrid funds.Answer: BQuestion Status: Previous Edition14) Measured by assets, the most popular type of bond fund is the bond fund.A) state municipalB) strategic incomeC) governmentD) high yieldAnswer: BQuestion Status: Previous Edition15) In recent years total assets in money market mutual fund
15、s have decreased. The most likely reason for this is thatA) short-term interest rates have been quite low.B) short-term interest rates have been quite high.C) long-term interest rates have been quite low.D) the risk of investing in money market funds has risen.Answer: AQuestion Status: Previous Edit
16、ion16) People who take their money out of insured bank deposits to invest in uninsured money market mutual funds have risk because money market funds invest inassets.A) high; long-termB) low; short-termC) high; short-termD) low; long-termAnswer: BQuestion Status: Previous Edition17) The largest shar
17、e of assets held by money market mutual funds isA) Treasury bills.B) certificates of deposit.C) commercial paper.D) repurchase agreements.Answer: CQuestion Status: Previous Edition18) Which of the following is a feature of index funds?A) They have lower fees.B) They select and hold stocks to match t
18、he performance of a stock index.C) They do not require managers to select stocks and decide when to buy and sell.D) All of the above.Answer: DQuestion Status: Previous Edition19) A deferred-load mutual fund charges a commissionA) when shares are purchased.B) when shares are sold.C) both when shares
19、are purchased and when they are sold.D) when shares are redeemed.Answer: DQuestion Status: Previous Edition20) Over the past twenty years mutual fund fees have, largely because. A) fallen; SEC fee disclosure rules have led to greater competitionB) risen; investors have learned that funds with high f
20、ees provide better performanceC) risen; there has been collusion between large mutual fund companiesD) fallen; advances in information technology have lowered transaction costs Answer: AQuestion Status: Previous Edition21) Which of the following is most likely to be a no-load fund?A) Value fundsB) H
21、edge fundsC) Growth fundsD) Index fundsAnswer: DQuestion Status: Previous Edition22) When investors switch between funds in different families, mutual funds may chargeA) a contingent deferred sales charge.B) a redemption fee.C) an exchange fee.D) 12b-l fees.E) an account maintenance fee.Answer: CQue
22、stion Status: Previous Edition23) The Securities Acts of 1933 and 1934 did notA) regulate the activities of investment funds.B) require funds to register with the SEC.C) include antifraud rules covering the purchase and sale of fund shares.D) apply to investment funds.Answer: BQuestion Status: Previ
23、ous Edition24) The largest share of total investment in mutual funds is inA) stock funds.B) hybrid fundsC) bond funds.D) money market funds.Answer: AQuestion Status: Previous Edition25) Hedge funds areA) low risk because they are market-neutral.B) low risk if they buy Treasury bonds.C) low risk beca
24、use they hedge their investments.D) high risk because they are market-neutral.E) high risk, even though they may be market-neutral.Answer: EQuestion Status: Previous Edition26) The near collapse of Long Term Capital Management was caused byA) the high management fees charged by the funds two Nobel P
25、rize winners.B) the funds high leverage ratio of 20 to 1.C) a sharp decrease in the spread between corporate bonds and Treasury bonds.D) a sharp increase in the spread between corporate bonds and Treasury bonds.E) the funds shift away from a market-neutral investment strategy.Answer: DQuestion Statu
26、s: Previous Edition27) Conflicts arise in the mutual funds industry because cannot e仔ectively monitorA) investment advisers; directorsB) directors; shareholdersC) shareholders; investment advisersD) investment advisers; stocks that will outperform the overall marketAnswer: CQuestion Status: Previous
27、 Edition28) Late trading is the practice of allowing orders received to trade at thenet asset value.A) before 4:00 pm; 4:00 pmB) after 4:00 pm; 4:00 pmC) after 4:00 pm; next daysD) before 4:00 pm; previous daysAnswer: BQuestion Status: Previous Edition29) Market timingA) takes advantage of time diff
28、erences between the east and west coasts of the United States.B) takes advantage of arbitrage opportunities in foreign stocks.C) takes advantage of the time lag between the receipt and execution of orders.D) is discouraged by the sti仔 fees mutual funds charge every investor for buying and then selli
29、ng shares on the same day.Answer: BQuestion Status: Previous Edition30) Late trading and market timingA) allow large, favored investors in a mutual fund to profit at the expense of other investors in the fund.B) hurt ordinary investors by increasing the number of fund shares and diluting the funds n
30、et asset value.C) both A and B.D) none of the above.Answer: CQuestion Status: Previous Edition31) Which of the following is not a proposal to deal with abuses in the mutual fund industry?A) Strictly enforce the 4:00 pm net asset value ruleB) Make redemption fees mandatoryC) Disclose compensation arr
31、angements for investment advisersD) Increase the number of dependent directorsAnswer: DQuestion Status: Previous Edition32)means the investors can convert their investment into cash quickly at a low cost.E) Liquidity intermediationF) Denomination intermediationG) DiversificationH) Managerial experti
32、seAnswer: AQuestion Status: New33) Mutual fund companies frequently offer a number of separate mutual funds called A) indexes.B) complexes.C) components.D) actuariries.Answer: BQuestion Status: New34) Equity funds can be placed in which class according to the Investment Company Institute?A) Capital
33、appreciation fundsB) World fundsC) Total return fundsD) All of the aboveAnswer: DQuestion Status: Newreturns.35) Government bonds are essentially default risk free,A) and will yield highB) and will yield the highestC) but will have relatively lowD) none of the aboveAnswer: CQuestion Status: New36)bo
34、nds combine stocks into one fund.A) HybridB) Money marketC) MunicipalD) EquityAnswer: AQuestion Status: New37) Allare open-end investment funds that invest only in money market securities.A) Stock fundsB) Bond fundsC) Money market mutual fundsD) all of the aboveAnswer: CQuestion Status: New21.2 True
35、/False1) The larger the number of shares traded in a stock transaction, the lower the transaction costs per share.Answer: TRUEQuestion Status: Previous Edition2) The increase in the number of defined contribution pension funds has slowed the growth of mutual funds.Answer: FALSEQuestion Status: Previ
36、ous Edition3) The dollar amount invested in mutual funds is about the same as the total assets of all commercial banks at the beginning of 2007.Answer: TRUEQuestion Status: Previous Edition4) Retirement funds account for two-thirds of all mutual fund assets.Answer: FALSEQuestion Status: Previous Edi
37、tion5) Open-end mutual funds are more common than closed-end funds.Answer: TRUEQuestion Status: Previous Edition6) The net asset value of a mutual fund is the average market price of the stocks, bonds, and other assets the fund owns.Answer: FALSEQuestion Status: Previous Edition7) A mutual funds boa
38、rd of directors picks the securities that will be held and makes buy and sell decisions.Answer: FALSEQuestion Status: Previous Edition8) Money market mutual funds originated when the brokerage firm Merrill Lynch offered its customers an account from which funds could be taken to purchase securities
39、and into which funds could be deposited when securities were sold.Answer: TRUEQuestion Status: Previous Edition9) A deferred load is a fee charged when shares in a mutual fund are redeemed.Answer: TRUEQuestion Status: Previous Edition10) SEC research suggests that about three-fourths of mutual funds
40、 let privileged shareholders engage in market timing.Answer: TRUEQuestion Status: Previous Edition11) One factor explaining the rapid growth in mutual funds is that they are financial intermediaries that are not regulated by the federal government.Answer: FALSEQuestion Status: Previous Edition12) Wh
41、ether a fund is organized as a closed- or an open-end fund, is will have the same basic organizational structure.Answer: TRUEQuestion Status: New13) The primary purpose of loads is to provide compensation for sales brokers.Answer: TRUEQuestion Status: New14) Mutual funds are regulated under four fed
42、eral laws designed to protect investors.Answer: TRUEQuestion Status: New21.3 Essay1) What benefits do mutual funds o仔er investors?Question Status: Previous Edition2) How is a mutual funds net asset value calculated?Question Status: Previous Edition3) How did money market mutual funds originate and w
43、hy did they become especially popular in the late 1970s and early 1980s?Question Status: Previous Edition4) How does the governance structure of mutual funds lead to asymmetric information and conflicts of interest?Question Status: Previous Edition5) Describe the practices of late trading and market
44、 timing and explain how these practices harm a mutual funds shareholders.Question Status: Previous Edition6) Discuss the proposals that have been made to reduce the conflict of interest abuses in the mutual funds industry.Question Status: Previous Edition7) Discuss the four primary classes of mutual funds available to investors.Question Status: New