Chapter 04 - Mutual Funds and Other Investment Companies

Chapter 04 Mutual Funds and Other Investment Companies Answer Key

1. Whih one o! the !ollowin" invests in a port!olio that is !i#ed !or the li!e o! the !und$
A. Mutual !und
%. Money mar&et !und
C. Mana"ed investment ompany
D. 'nit investment trust
(. )))))) are partnerships o! investors with port!olios that are lar"er than most individual
investors *ut are still too small to warrant mana"in" on a separate *asis.
A. Commin"led !unds
%. Closed-end !unds
C. +,I-s
.. Mutual !unds
/. A )))))))))) is a private investment pool open only to wealthy or institutional investors
that is e#empt !rom 0,C re"ulation and an there!ore pursue more speulative poliies than
mutual !unds.
A. ommin"led pool
%. unit trust
C. hed"e !und
.. money mar&et !und
4. Advanta"es o! investment ompanies to investors inlude all *ut whih one o! the
!ollowin"$
A. +eord &eepin" and administration
%. 1ow ost diversi!iation
C. 2ro!essional mana"ement
D. 3uaranteed rates o! return
4. Whih o! the !ollowin" typially employ si"ni!iant amounts o! levera"e$
I. 5ed"e !unds
II. +,I-s
III. Money mar&et !unds
I6. ,7uity mutual !unds
A. I and II only
%. II and III only
C. III and I6 only
.. I8 II and III only
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Chapter 04 - Mutual Funds and Other Investment Companies
9. -he :A6 o! whih !unds is !i#ed at ;1 per share$
A. ,7uity !unds
B. Money mar&et !unds
C. Fi#ed inome !unds
.. Commin"led !unds
<. -he two prinipal types o! +,I-s are e7uity trusts whih ))))))))))))))) and mort"a"e
trusts whih ))))))))))))))).
A. invest diretly in real estate= invest in mort"a"e and onstrution loans
%. invest in mort"a"e and onstrution loans= invest diretly in real estate
C. use e#tensive levera"e= distri*ute less than >4? o! inome to shareholders
.. distri*ute less than >4? o! inome to shareholders= use e#tensive levera"e
@. A ontin"ent de!erred sales har"e is ommonly alled a )))).
A. !ront-end load
B. *a&-end load
C. 1(*-1 har"e
.. top end sales ommission
>. In the '.0. there are appro#imately ))))))) mutual !unds o!!ered *y less than )))))))
!und !amilies.
A. 1(8000= 900
%. <8000= 100
C. @8000= 400
.. >8000= /00
10. In 1>>>8 the 0,C esta*lished rules that should ma&e a mutual !und prospetus ))))))).
A. easier to read and understand
%. muh more detailed
C. disappear over the ne#t 10 years
.. irrelevant to investors
11. Mutual !unds provide the !ollowin" !or their shareholdersA
A. .iversi!iation
%. 2ro!essional mana"ement
C. +eord &eepin" and administration
D. Mutual !unds provide diversi!iation8 pro!essional mana"ement8 and reord &eepin" and
administration
1(. -he avera"e maturity o! !und investments in a money mar&et mutual !und is ))))))).
A. sli"htly more than one month
%. sli"htly more than one year
C. a*out > months
.. *etween ( and / years
4-(
Chapter 04 - Mutual Funds and Other Investment Companies
1/. +an& the !ollowin" !und ate"ory !rom most ris&y to least ris&y.
I. ,7uity "rowth !und
II. %alaned !und
III. 0etor !und
I6. Money mar&et !und
A. I68 I8 III8 II
%. III8 II8 I68 I
C. I8 II8 III8 I6
D. III8 I8 II8 I6
14. Whih o! the !ollowin" result in a ta#a*le event !or investors$
I. 0hort-term apital "ains distri*utions !rom the !und
II. .ividend distri*utions !rom the !und
III. 1on"-term apital "ains distri*utions !rom the !und
A. I only
%. II only
C. I and II only
D. I8 II and III
14. -he type o! mutual !und that primarily en"a"es in mar&et timin" is alled aBan ))))))).
A. setor !und
%. inde# !und
C. ,-F
D. asset alloation !und
19. As o! (00@8 appro#imately ))))) o! mutual !und assets were invested in e7uity !unds.
A. 4?
B. 44?
C. /0?
.. 1(?
1<. As o! (00@8 appro#imately ))))) o! mutual !und assets were invested in *ond !unds.
A. 14?
%. 1>?
C. /<?
.. 4<?

1@. As o! (00@8 appro#imately ))))) o! mutual !und assets were invested in money mar&et
!unds.
A. 4?
B. (9?
C. 44?
.. 99?
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Chapter 04 - Mutual Funds and Other Investment Companies
1>. Mana"ement !ees !or open-end and losed-end !unds8 typially ran"e *etween ))))) and
))))).
A. 0.(?= 1.4?
%. 0.4?= 4?
C. (?= 4?
.. /?= @?
(0. -he primary measurement unit used !or assessin" the value o! oneCs sta&e in an investment
ompany is ))))))))))))))))))).
A. :et Asset 6alue
%. Avera"e Asset 6alue
C. 3ross Asset 6alue
.. -otal Asset 6alue
(1. :et Asset 6alue is de!ined as )))))))))))))))))))))))).
A. *oo& value o! assets divided *y shares outstandin"
%. *oo& value o! assets minus lia*ilities divided *y shares outstandin"
C. mar&et value o! assets divided *y shares outstandin"
D. mar&et value o! assets minus lia*ilities divided *y shares outstandin"
((. Assume that you have Dust purhased some shares in an investment ompany reportin"
;400 million in assets8 ;40 million in lia*ilities8 and 40 million shares outstandin". What is
the :et Asset 6alue E:A6F o! these shares$
A. ;1(.00
B. ;>.00
C. ;10.00
.. ;1.00
(/. Assume that you have reently purhased 100 shares in an investment ompany. 'pon
e#aminin" the *alane sheet8 you note the !irm is reportin" ;((4 million in assets8 ;/0 million
in lia*ilities8 and 10 million shares outstandin". What is the :et Asset 6alue E:A6F o! these
shares$
A. ;(4.40
%. ;((.40
C. ;1>.40
.. ;1.>4
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Chapter 04 - Mutual Funds and Other Investment Companies
(4. -he 6an"uard 400 Inde# Fund tra&s the per!ormane o! the 0G2 400. -o do so the !und
*uys shares in eah 0G2 400 ompany )))))))))).
A. in proportion to the mar&et value wei"ht o! the !irmCs e7uity in the 0G2400
%. in proportion to the prie wei"ht o! the sto& in the 0G2400
C. *y purhasin" an e7ual num*er o! shares o! eah sto& in the 0G2 400
.. *y purhasin" an e7ual dollar amount o! shares o! eah sto& in the 0G2400
(4. Whih o! the !ollowin" is not a type o! mana"ed investment ompany$
A. 'nit investment trusts
%. Closed-end !unds
C. Open-end !unds
.. 5ed"e !unds
(9. Whih o! the !ollowin" !unds invest in sto&s o! !ast "rowin" ompanies$
A. %alaned !unds
B. 3rowth e7uity !unds
C. +,I-s
.. ,7uity inome !unds
(<. A !und that invests in seurities worldwide8 inludin" the 'nited 0tates is alled aBan
)))))).
A. international !und
%. emer"in" mar&et !und
C. "lo*al !und
.. re"ional !und
(@. -he "reatest perenta"e o! mutual !und assets are invested in )))))))).
A. *ond !unds
B. e7uity !unds
C. hy*rid !unds
.. money mar&et !unds
(>. 0ponsors o! unit investment trusts earn a pro!it *y ))))))))))))))))))).
A. dedutin" mana"ement !ees !rom !und assets
%. dedutin" a perenta"e o! any "ains in asset value
C. sellin" shares in the trust at a premium to the ost o! a7uirin" the underlyin" assets
.. har"in" port!olio turnover !ees
/0. Investors who wish to li7uidate their holdin"s in a unit investment trust may
))))))))))))))))))).
A. sell their shares *a& to the trustee at a disount
B. sell their shares *a& to the trustee at net asset value
C. sell their shares on the open mar&et
.. sell their shares at a premium to net asset value
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Chapter 04 - Mutual Funds and Other Investment Companies
/1. Investors who wish to li7uidate their holdin"s in a losed-end !und may
))))))))))))))))))).
A. sell their shares *a& to the !und at a disount i! they wish
%. sell their shares *a& to the !und at net asset value
C. sell their shares on the open mar&et
.. sell their shares at a premium to net asset value i! they wish
/(. )))))))))) !und is de!ined as one where the !und har"es a sales ommission to either
*uy into or e#it the !und.
A. A load
%. A no-load
C. An inde#
.. A speialiHed setor !und
//. )))))))))) is a false statement re"ardin" open-end mutual !unds.
A. -hey o!!er investors a "uaranteed rate o! return
%. -hey o!!er investors a well diversi!ied port!olio
C. -hey redeem shares at their net asset value
.. -hey o!!er low ost diversi!iation
/4. )))))))))) !unds stand ready to redeem or issue shares at their net asset value.
A. Closed-end
%. Inde#
C. Open-end
.. 5ed"e


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Chapter 04 - Mutual Funds and Other Investment Companies
/4. +evenue sharin" with respet to mutual !unds re!ers to ))))))))).
A. !und ompanies payin" *ro&ers i! the *ro&er reommends the !und to investors
%. allowin" ertain lasses o! investors to en"a"e in mar&et timin"
C. har"in" loads to new investors in a mutual !und
.. diretly mar&etin" !unds over the Internet
/9. 5i"her port!olio turnover
I. results in "reater ta# lia*ility !or investors
II. results in "reater tradin" osts !or the !und8 whih investors have to pay !or
III. is a harateristi o! asset alloation !unds
A. I only
%. II only
C. I and II only
D. I8 II and III
/<. 1ow load mutual !unds have !ront-end loads o! no more than ))))).
A. (?
B. /?
C. 4?
.. 4?
/@. Most real estate investment trusts E+,I-sF have a de*t ratio o! around ))))))))).
A. 10 ?
%. /0 ?
C. 40 ?
D. <0 ?
/>. Measured *y assets8 a*out ))))) o! !unds are money mar&et !unds.
A. 14?
B. (4?
C. 40?
.. 90?
40. Whih o! the !ollowin" is not a type o! real estate investment trust$
I. ,7uity trust
II. .e*t trust
III. Mort"a"e trust
I6. 'nit trust
A. I and II only
%. II only
C. II and I6 only
.. I8 II and III

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Chapter 04 - Mutual Funds and Other Investment Companies
41. )))))))))))))))))))))) are o!ten alled mutual !unds.
A. 'nit investment trusts
B. Open-end investment ompanies
C. Closed-end investment ompanies
.. +,I-s
4(. Mutual !unds aount !or rou"hly )))))) perent o! investment ompany assets.
A. /0
%. 40
C. <0
D. >0
4/. An o!!iial desription o! a partiular mutual !undCs planned investment poliy an *e
!ound in the !undCs ))))))))))))).
A. prospetus
%. indenture
C. investment statement
.. 1(*-1 !orms
44. Mutual !unds that hold *oth e7uities and !i#ed-inome seurities in relatively sta*le
proportions are alled )))))))))))))))))))).
A. inome !unds
B. *alaned !unds
C. asset alloation !unds
.. inde# !unds
44. Mutual !unds that vary the proportions o! !unds invested in partiular mar&et setors
aordin" to the !und mana"erCs !oreast o! the per!ormane o! that mar&et setor8 are alled
)))))))))))))))))))).
A. asset alloation !unds
%. *alaned !unds
C. inde# !unds
.. inome !unds
49. 0peialiHed setor !unds onentrate their investments in ))))))))))))))))).
A. *onds o! a partiular maturity
%. "eo"raphial se"ments o! the real estate mar&et
C. "overnment seurities
D. seurities issued *y !irms in a partiular industry

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Chapter 04 - Mutual Funds and Other Investment Companies
4<. I! a mutual !und has multiple lass shares8 whih lass typially has a !ront end load$
A. Class A
%. Class %
C. Class C
.. Class .
4@. -he ommission8 or !ront-end load8 paid when you purhase shares in mutual !unds8 may
not e#eed )))))))))).
A. /?
%. 9?
C. @.4?
.. 10?
4>. Iou are onsiderin" investin" in one o! several mutual !unds. All the !unds under
onsideration have various om*inations o! !ront-end and *a&-end loads andBor 1(*-1 !ees.
-he lon"er you plan on remainin" in the !und you hoose8 the more li&ely you will pre!er a
!und with a )))))))))) rather than a ))))))))))8 everythin" else e7ual.
A. 1(*-1 !ee= !ront-end load
B. !ront-end load= 1(*-1 !ee
C. *a&-end load8 !ront-end load
.. 1(*-1 !ee= *a&-end load
40. 'nder 0,C rules8 the mana"ers o! ertain !unds are allowed to dedut har"es !or
advertisin"8 *ro&era"e ommissions8 and other sales e#penses8 diretly !rom the !und assets
rather than *illin" investors. -hese !ees are &nown as )))))))))))).
A. diret operatin" e#penses
%. *a&-end loads
C. 1(*-1 har"es
.. !ront-end loads
41. In (0008 the 0,C instituted new rules that re7uire !unds to dislose ))))).
A. 1(*-1 !ees
B. the ta# impat o! port!olio turnover
C. !ront-end loads
.. *a&-end loads
4(. 0,C rule 1(*-1 allows mana"ers o! ertain !unds to dedut )))))))))) e#penses !rom
!und assets8 however8 these e#penses may not e#eed )))))))))) o! the !undCs avera"e net
assets per year.
A. mar&etin"= 1?
%. mar&etin"= 4?
C. administrative= 0.4?
.. administrative= (?

4->
Chapter 04 - Mutual Funds and Other Investment Companies
4/. Consider a mutual !und with ;/00 million in assets at the start o! the year8 and 1( million
shares outstandin". I! the "ross return on assets is 1@? and the total e#pense ratio is (? o! the
year end value8 what is the rate o! return on the !und$
A. 14.94?
%. 19.00?
C. 1<.(4?
.. 1<.40?
44. Consider a no-load mutual !und with ;(00 million in assets and 10 million shares at the
start o! the year8 and ;(40 million in assets and 11 million shares at the end o! the year.
.urin" the year investors have reeived inome distri*utions o! ;( per share8 and apital "ains
distri*utions o! ;0.(4 per share. Assumin" that the !und arries no de*t8 and that the total
e#pense ratio is 1?8 what is the rate o! return on the !und$
A. /9.(4?
B. (4.>0?
C. (/.@4?
.. -here is not su!!iient in!ormation to answer this 7uestion
0ine this is a no-load !und8 all har"es are already em*edded in "ross return. -hus8 "ross
return and net return are the same.
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Chapter 04 - Mutual Funds and Other Investment Companies
44. Consider a no-load mutual !und with ;400 million in assets8 40 million in de*t8 and 14
million shares at the start o! the year= and ;400 million in assets8 40 million in de*t8 and 1@
million shares at the end o! the year. .urin" the year investors have reeived inome
distri*utions o! ;0.40 per share8 and apital "ains distri*utions o! ;0./0 per share. Assumin"
that the !und arries no de*t8 and that the total e#pense ratio is 0.<4?8 what is the rate o!
return on the !und$
A. 1(.0>?
%. 1(.>>?
C. @.(4?
.. -here is not su!!iient in!ormation to answer this 7uestion
0ine this is a no-load !und8 all har"es are already em*edded in "ross return. -hus8 "ross
return and net return are the same.
49. Mutual !und returns may *e "ranted pass-throu"h status8 i! ))))))))))))))))).
A. at least >0 perent o! all inome is distri*uted to shareholders
%. at least /0 perent o! !und inome is derived !rom sale o! seurities held !or less than /
months
C. ertain diversi!iation riteria are met
D. All o! these must *e true !or pass-throu"h status to *e "ranted
4<. ABan ))))) is an e#ample o! an e#han"e-traded !und.
A. 02.+ or spider
%. samurai
C. 6an"uard
.. open-end !und
4@. I! you plae an order to *uy or sell a share o! a mutual !und durin" the tradin" day the
order will *e e#euted at
A. the :A6 alulated at the mar&et lose at 4A00 pm :ew Ior& time.
%. the real time :A6.
C. the :A6 delayed 14 minutes.
.. the :A6 alulated at the open o! the ne#t dayCs tradin".

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Chapter 04 - Mutual Funds and Other Investment Companies
4>. With respet to mutual !unds8 late tradin" re!ers to the pratie o! )))))))).
A. tradin" a!ter the lose o! '.0. mar&ets *ut *e!ore overseas mar&ets have losed
%. tradin" a!ter the lose o! overseas mar&ets8 *ut *e!ore '.0. mar&ets have losed
C. aeptin" *uy or sell orders a!ter the mar&et loses and :A6 has already *een determined
!or the day
.. payin" apital "ains distri*utions to ertain investors only a!ter payin" privile"ed investors
!irst
90. In the 1><0 study8 Mal&iel !ound that mutual !unds that do well in one period8 have an
appro#imately )))))))) hane o! doin" well in the su*se7uent ear period.
A. //?
%. 4(?
C. 94?
.. @4?
91. In a reent study8 Mal&iel !inds that evidene o! persistene in the per!ormane o! mutual
!unds8 )))))))))))))))) in the 1>@0s.
A. "rows stron"er
%. remains a*out the same
C. *eomes sli"htly wea&er
D. virtually disappears

9(. -he ratio o! tradin" ativity o! a port!olio to the assets o! the port!olio8 is alled
)))))))))))).
A. the reinvestment ratio
%. the tradin" rate
C. the port!olio turnover
.. the ta# yield
9/. Whih o! the !ollowin" ,-Fs tra&s the 0G2 400 inde#$
A. Ju*es
%. .iamonds
C. 6ipers
D. 0piders
4-1(
Chapter 04 - Mutual Funds and Other Investment Companies
94. -he 0tone 5ar*or Fund is a losed-end investment ompany with a port!olio urrently
worth ;/00 million. It has lia*ilities o! ;4 million and > million shares outstandin". I! the
!und sells !or ;/0 a share8 what is its premium or disount as a perent o! :A6$
A. >.(9? premium
%. @.4<? premium
C. >.(9? disount
D. @.4<? disount
:A6 K E;/0080008000 - ;480008000FB>80008000 K ;/(.<@
.isount K ;/(.<@ - ;/0 K ;(.<@
94. -he di!!erene *etween *alaned !unds and asset alloation !unds is that ))))).
A. *alaned !unds invest in *onds while asset alloation !unds do not
%. asset alloation !unds invest in *onds while *alaned !unds do not
C. *alaned !unds have relatively sta*le proportions o! sto&s and *onds while the
proportions may vary dramatially !or asset alloation !unds
.. *alaned !unds ma&e no apital "ains distri*utions and asset alloation !unds ma&e *oth
dividend and apital "ains distri*utions
99. -he Wildwood Fund sells Class A shares with a !ront-end load o! 4? and Class % 0hares
with a 1(*-1 !ees o! 1? annually. I! you plan to sell the !und a!ter 4 years8 are Class A or
Class % shares the *etter hoie$ Assume a 10? annual return net o! e#penses.
A. Class A
B. Class %
C. -here is no di!!erene.
.. -here is insu!!iient in!ormation "iven.

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Chapter 04 - Mutual Funds and Other Investment Companies
9<. A mutual !und has total assets outstandin" o! ;9> million. .urin" the year the !und *ou"ht
and sold assets e7ual to ;1<.(4 million. -his !undCs turnover rate was ))))).
A. (4.00?
%. (@.40?
C. [email protected]/?
.. //.40?
;1<.(4B;9> K (4.00?
9@. Whih type o! investment !und is ommonly &nown to invest in options and !utures in
lar"e sale$
A. Commin"led !unds
B. 5ed"e !unds
C. ,-Fs
.. +,I-0
9>. Advanta"es o! ,-Fs over mutual !unds inlude all *ut whih one o! the !ollowin"$
A. ,-Fs trade ontinuously so investors an trade throu"hout the day
%. ,-Fs an *e sold short or purhased on mar"in8 unli&e !und shares
C. ,-F providers do not have to sell holdin"s to !und redemptions
D. ,-F values an diver"e !rom :A6
<0. 5arold has Dust ta&en his ompany pu*li and owns a lar"e 7uantity o! restrited sto&.
For purposes o! diversi!iation8 what !und mi"ht he help reate in order to diversi!y his
holdin"s$
A. Commin"led !unds
%. 5ed"e !unds
C. ,-F
.. +,I-s
<1. Whih o! the !ollowin" !unds is most li&ely to have a de*t ratio o! <0? or hi"her$
A. %ond !und
%. Commin"led !und
C. Mort"a"e *a&ed seurities
D. +,I-
<(. A*out ))))))))) o! mutual !und assets are invested in no-load !unds.
A. //?
%. 40?
C. 40?
D. 94?
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Chapter 04 - Mutual Funds and Other Investment Companies
</. From 1><1 to (00< the avera"e return on the Wilshire 4000 inde# was ))))))))) the
return o! the avera"e mutual !und.
A. idential to
B. 1? hi"her than
C. 1? lower than
.. /? lower than
<4. An open-end !und has a :A6 o! ;19.40 per share. -he !und har"es a 9? load. What is
the o!!erin" prie$
A. ;14.4<
%. ;14.>4
C. ;1<.44
.. ;19.4>

<4. -he o!!er prie o! an open-end !und is ;[email protected] and the !und is sold with a !ront-end load o!
4?$ What is the !undCs :A6$
A. ;1@.<4
B. ;1<.10
C. ;14.40
.. ;19.4<
E;[email protected] - 0.04F K ;1<.10
<9. A mutual !und has ;40 million in assets at the *e"innin" o! the year and 1 million shares
outstandin" throu"hout the year. -hrou"hout the year assets "row at 1(?. -he !und imposes a
1(*-1 !ee on all shares e7ual to 1?. -he !ee is imposed on year end asset values. I! there are
no distri*utions what is the end o! year :A6 !or the !und$
A. ;40.00
B. ;44.44
C. ;49.1(
.. ;44.44

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Chapter 04 - Mutual Funds and Other Investment Companies
<<. -he assets o! a mutual !und are ;(4 million. -he lia*ilities are ;4 million. I! the !und has
<008000 shares outstandin" and pays a ;/ dividend8 what is the dividend yield$
A. 4?
B. 10?
C. 14?
.. (0?
2rie per share K E(4 million - 4 millionFB<008000 K /0 per share
.ividend yield K /B/0 K 10?
<@. Whih o! the !ollowin" !unds are usually most ta# e!!iient$
A. ,7uity !unds
%. %ond Funds
C. ,-Fs
.. 0peialiHed setor !unds
<>. Iou invest in a mutual !und that har"es a /? !ront end load8 1? total annual !ees8 and a
(? *a& end load8 whih dereases 0.4? per year. 5ow muh will you pay in !ees on a
;108000 investment that does not "row8 i! you ash out a!ter three years o! no "ain$
A. 10/
%. (1>
C. 44/
D. 9/4
total !ees K 108000 - E108000 # .><F # E.>>F # E.>>F # E.>>F # E.>>4F K 9/4
@0. Iou invest in a mutual !und that har"es a /? !ront end load8 1? total annual !ees8 and a
0? *a& end load on Class A shares. -he same !und har"es 0? !ront end load8 1? total
annual !ees8 and a (? *a& end load on Class % shares. What are the total !ees in year one on
a Class A investment o! ;(08000 with no "rowth in value$
A. 94@
B. <>4
C. @@4
.. >0(
First year !ees K (08000 - E(08000 # .>< # .>>F K <>4
@1. Iou invest in a mutual !und that har"es a /? !ront end load8 1? total annual !ees8 and a
0? *a& end load on Class A shares. -he same !und har"es 0? !ront end load8 1? total
annual !ees8 and a (? *a& end load on Class % shares. What are the total !ees in year one on
a Class % investment o! ;(08000 i! you redeem shares with no "rowth in value$
A. 4>9
%. <>4
C. @@4
.. >0(
4-19
Chapter 04 - Mutual Funds and Other Investment Companies
-otal !ees a!ter one year K (08000 - E(08000 # 0.>@ # 0.>>F K 4>9
@(. Iou pay ;(18900 to the 1aramie Fund whih has a :A6 o! ;[email protected] per share at the
*e"innin" o! the year. -he !und deduted a !ront-end load o! 4?. -he seurities in the !und
inreased in value *y 10? durin" the year. -he !undCs e#pense ratio is 1./? and is deduted
!rom year end asset values. What is your rate o! return on the !und i! you sell your shares at
the end o! the year$
A. 4./4?
B. 4.(/?
C. 9.44?
.. 4.9/?
@/. Whih one o! the !ollowin" statements a*out returns reported *y mutual !unds is not
orret$
A. +eported returns are net o! mana"ement e#penses
%. +eported returns are net o! 1(*-1 !ees
C. +eported returns are net o! *ro&era"e !ees paid on the !undCs tradin" ativity
D. +eported returns are net o! load har"es
@4. -he top Mornin"star mutual !und per!ormane ratin" is )))))))).
A. !ive stars
%. !our stars
C. three stars
.. two stars
@4. Iou are onsiderin" investin" in a no load mutual !und with an annual e#pense ratio o!
0.9? and an annual 1(*-1 !ee o! 0.<4?. Iou ould also invest in a *an& C. payin" 9.4? per
year. What minimum annual rate o! return must the !und earn to ma&e you *etter o!! in the
!und than in the C.$
A. <.10?
%. <.44?
C. <.(4?
D. <.@4?
r L 9.4 M 0.09 M 0.0<4 K <.@4?

Difficulty: Medium

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