SIE Exam Lesson 19 Mutual Funds pt 2 Quiz

SIE Exam: Securities Industry Essentials Exam Lessons and Information

SIE Exam Lesson 19 Mutual Funds pt 2 Quiz SIE Exam Lesson 19 Mutual Funds pt 2 Quiz This is a SIE Exam Lesson 19 Mutual Funds pt 2 Quiz, See how you do if you need help listen to the lesson over. Questions covered include 1. Which of the following is true about closed-end funds? (Select all that apply.) A. It can trade at a premium or at discount to net asset value. B. It is redeemed. C. It has a fixed maturity and interest rate. D. It trades as a common stock on the exchanges wherever it is listed. 2. Which of the following details can be found on the website of the company that sponsors a closed-end fund? (Select all that apply.) A. discount to net asset value B. net asset value C. premium D. price of the stock 3. It is the amount annually collected from the shareholders, which include all the operating cost of the fund. A. conversion ratio B. expense ratio C. liquidity ratio D. Sharpe ratio 4. If a closed-end fund has a very high expense ratio, one reason you might wish to buy the fund is because ___. A. it is sold at net asset value B. it is sold at net asset value less than the expense ratio C. it is sold at par value D. it is sold at a big discount to net asset value 5. In financial industry, “Red Herring” refers to ___. A. expense ratio B. hedge funds C. master limited partnerships D. preliminary prospectus 6. Which of the following is true about a preliminary prospectus? (Select all that apply.) A. It contains the price of shares agreed upon. B. It contains the total number of shares issued. C. It does not contain the price of shares agreed upon. D. It does not contain the total number of shares issued. 7. One way that funds will get a higher return than the market average or a bigger loss than the market average is by leveraging their assets. A. True B. False 8. A fund is leveraged at 9.2%. If it has $80,000,000 in its assets, the portfolio would reflect a value of ___. A. $7,360,000 B. $72,640,000 C. $73,600,000 D. $87,360,000 9. Leveraged funds enhance returns and outperform the market when stocks are going down. A. True B. False 10. A mutual fund or a management company must distribute their income ___. A. annually B. monthly C. quarterly D. weekly 11. A management company distributes its income in a form of ___. (Select all that apply.) A. capital gains B. commissions C. dividends D. interest 12. These are capital gains that the management company must distribute at least on an annual basis. A. capital yield B. distribution yield C. dividend yield D. income yield 13. Dividend yield is the dividend that is paid out from the stocks that the management company owns and then passed through to the investors. A. True B. False 14. If you buy a closed-end fund before or close to the record date, your net asset value would decline by the amount of the distribution. A. True B. False 15. What would be a good reason for management companies to organize as master limited partnerships? A. They want to acquire big positions in closed-end funds. B. They want to avoid the double taxation. C. They want to decrease their management expenses. D. They want to increase their management fees. 16. It is a tax document of a master limited partnership. A. 1099-DIV B. 1601F C. CF-213 D. K-1 17. Why would a management company organize as a closed-end fund instead of an open-end fund? A. Closed-end funds generally have higher sales commission than open-end funds. B. In closed-end funds, managers may have to sell into a down market to raise money to pay for redemption. C. In closed-end funds, managers will not be forced to redeem shares when the market is weak. D. Unlike open-end funds, closed-end funds are more secure with specific maturity and interest rate. 18. A mutual fund held in another mutual fund would have double management fees. A. True B. False 19. The management fees of closed end funds ___.