BUSI 420 Read & Interact Jordan, Miller Jr., & Dolvin Chapter 4 solutions complete answers

BUSI 420 Read & Interact Jordan, Miller Jr., & Dolvin Chapter 4 solutions complete answers

 

A(n) Blank______ offers investors a diversified array of investment vehicles along with low fees and the ability to trade throughout the trading day.

 

What is an exchange-trade fund? 

 

Which of the following is not an advantage of investing in mutual funds?

 

Which of the following funds would have its shares listed on a secondary exchange?

 

The total value of net assets held by a fund divided by the number of shares it has outstanding is referred to as the fund's NAV, or _______.

 

True or false: Investment companies must pay tax on the returns generated by the underlying assets held in the fund.

 

Mutual funds are required by law to produce a document called a _____.

 

True or false: An investor would need a minimum of $5,000 to invest in most mutual funds.

 

Mutual funds sell shares to new investors and redeem shares of existing investors who wish to exit. Thus, they are classified as       -end funds.

 

True or false: Day traders would be attracted to mutual funds since they can access large portfolios in one trade.

 

Net asset value is the value of the assets minus        held by a mutual fund, divided by the number of shares outstanding.

 

There are        types of expenses or fees associated with buying and owning mutual fund shares.

 

As long as an investment company meets certain rules set by the IRS, it is treated as a ________ for tax purposes.

 

True or false: A front-end load is expressed as a percentage of the firm's net asset value.

 

Mutual fund companies must provide a document to their investors to summarize important details about the fund. This document is called a       .

 

True or false: Passively managed mutual funds will generally have a lower expense ratio than actively managed funds.

 

True or false: Historical performance suggests that managers that charge a load most often have better performance.

 

Mutual fund investors specify the _________ they wish to purchase.

 

Because of their favorable tax treatment, tax-exempt money market instruments have much lower _____ than taxable funds.

 

All of the following are possible expenses associated with investing in a mutual fund, except:

 

Index funds hold the stocks that make up a particular index in the ______ as the index.

 

A fund that requires the investor to pay an additional sales charge to invest in a fund is said to charge a       .

 

The measure of the safety of a bond relative to others in terms of default risk is called _____.

 

The expense ratio reported by a mutual fund will include which two fees?

 

A life-cycle fund is also called a        date fund.

 

One reason given in the text for purchasing a loaded fund is that you want a _____ type of fund.

 

True or false: Firms with good past performance are guaranteed to have better future performance.

 

True or false: Assume a tax-free money market fund is yielding 2.2%. An equivalent taxable fund is yielding 2.9%. The tax-free fund is always preferred over the taxable fund.

 

A closed-end fund that is trading at a price below NAV is said to be trading at a _______.

 

A fund that holds stocks in proportion to their weights is referred to as an        fund.

 

True or false: Because they are active investments, ETFs generally have higher fees.

 

Five characteristics distinguish bond funds. These include maturity range, credit quality, type of bond, country, and       .

 

A        ETF or ETN uses derivatives to magnify the return on an underlying index.

 

True or false: Target date funds select an asset allocation based on the anticipated date when an investor will need the funds, which is typically a retirement date.

 

True or false: Hedge funds generally have lower fees than traditional mutual funds.

 

True or false: All else equal, funds with higher costs will have lower net performance.

 

True or false: All mutual funds are investment companies, but not all investment companies are mutual funds.

 

True or false: Essentially all closed-end funds have either premiums or discounts.

 

An index fund that trades like a stock and is designed to track a particular index is referred to as a(n) ______.

 

The fund managers of a leveraged ETF create a portfolio designed to provide a return that tracks the _______.

 

Assume a hedge fund has a 2/20 fee structure. Under this approach, the fund managers would receive a 2%        fee and would keep 20% of the       .

 

What are the two fundamental types of investment companies?

 

A common performance constraint that prevents hedge fund managers from manipulating returns to generate extra incentive fees is a __________.

 

During periods of high market ________, leveraged funds will find it more difficult to track their stated objective.

 

A fund's _____ is a measure of how much trading a fund does.

 

Funds that specialize in countries with small or newly established stock markets are called __________ markets funds.

 

Increased volatility will reduce the ___________ average return of a leveraged mutual fund.

 

Investors who meet the requirements necessary to invest in a hedge fund are said to be qualified, or ___________ .

 

Money market funds attempt to set their NAV such that it is always $____.

 

Money market funds would be classified as a _____.

 

True or false: A fund with a higher turnover, all else equal, will have a higher cost of ownership.

 

True or false: International funds include U.S. stocks, whereas global funds do not.

 

True or false: Qualified, or accredited, requirements are meant to prevent unsophisticated investors from getting involved.