Mutual Funds and Other Investment Companies Answer Key Part 3

41. A mutual fund had year-end assets of $465,000,000 and liabilities of $37,000,000. If the fund NAV was $56.12, how many shares must have been held in the fund? A. 4,300,000 B. 6,488,372 C. 8,601,709 D. 7,626,515 E. 7,146,972 ($465,000,000 − 37,000,000)/$56.12 = 7,626,515. 42. A mutual fund had year-end assets of $521,000,000 and liabilities of $63,000,000. If the fund NAV was $26.12, how many shares must have been held in the fund? A. 17,534,456 B. 16,488,372 C. 18,601,742 D. 17,542,515 E. 19,521,034 ($521,000,000 − 63,000,000)/$26.12 = 17,534,456. 43. A mutual fund had year-end assets of $327,000,000 and liabilities of $46,000,000. If the fund NAV was $30.48, how many shares must have been held in the fund? A. 11,354,751 B. 8,412,642 C. 10,165,476 D. 9,165,414 E. 9,219,160 ($327,000,000 − 46,000,000)/$30.48 = 9,219,160. 44. A mutual fund had year-end assets of $437,000,000 and liabilities of $37,000,000. If the fund NAV was $60.12, how many shares must have been held in the fund? A. 6,653,360 B. 8,412,642 C. 10,165,476 D. 9,165,414 E. 9,219,160 ($437,000,000 − 37,000,000)/$60.12 = 6,653,359.947. 45. A mutual fund had NAV per share of $19.00 on January 1, 2009. On December 31 of the same year the fund's NAV was $19.14. Income distributions were $0.57 and the fund had capital gain distributions of $1.12. Without considering taxes and transactions costs, what rate of return did an investor receive on the fund last year? A. 11.26% B. 10.54% C. 7.97% D. 8.26% E. 9.63% R = ($19.14 − 19.00 + .57 + 1.12)/$19.00 = 9.63% 46. A mutual fund had NAV per share of $23.00 on January 1, 2009. On December 31 of the same year the fund's NAV was $23.15. Income distributions were $0.63 and the fund had capital gain distributions of $1.26. Without considering taxes and transactions costs, what rate of return did an investor receive on the fund last year? A. 11.26% B. 10.54% C. 8.87% D. 8.26% E. 9.63% R = ($23.15 − 23.00 + .63 + 1.26)/$23.00 = 8.869% 47. A mutual fund had NAV per share of $26.25 on January 1, 2009. On December 31 of the same year the fund's rate of return for the year was 16.4%. Income distributions were $1.27 and the fund had capital gain distributions of $1.85. Without considering taxes and transactions costs, what ending NAV would you calculate? A. $27.44 B. $33.88 C. $24.69 D. $42.03 E. $16.62 .164 = (P − $26.25 + 1.27 + 1.85)/$26.25; P = $27.435 48. A mutual fund had NAV per share of $16.75 on January 1, 2009. On December 31 of the same year the fund's rate of return for the year was 26.6%. Income distributions were $1.79 and the fund had capital gain distributions of $2.80. Without considering taxes and transactions costs, what ending NAV would you calculate? A. $17.44 B. $13.28 C. $14.96 D. $17.25 E. $16.62 .266 = (P − $16.75 + 1.79 + 2.80)/$16.75; P = $16.615 49. A mutual fund had NAV per share of $36.15 on January 1, 2009. On December 31 of the same year the fund's rate of return for the year was 14.0%. Income distributions were $1.16 and the fund had capital gain distributions of $2.12. Without considering taxes and transactions costs, what ending NAV would you calculate? A. $37.93 B. $34.52 C. $44.69 D. $47.25 E. $36.28 .14 = (P − $36.15 + 1.16 + 2.12)/$36.15; P = $37.931 50. A mutual fund had NAV per share of $37.12 on January 1, 2009. On December 31 of the same year the fund's rate of return for the year was 11.0%. Income distributions were $2.26 and the fund had capital gain distributions of $1.64. Without considering taxes and transactions costs, what ending NAV would you calculate? A. $37.93 B. $34.52 C. $37.30 D. $47.25 E. $36.28 .11 = (P − $37.12 + 2.26 + 1.64)/$37.12; P = $37.303 51. Differences between hedge funds and mutual funds are that A. hedge funds are only subject to minimal SEC regulation. B. hedge funds are typically open only to wealthy or institutional investors. C. hedge fund managers can pursue strategies not available to mutual funds such as short selling, heavy use of derivatives, and leverage. D. hedge funds are commonly structured as private partnerships. E. hedge funds are only subject to minimal SEC regulation, are typically open only to wealthy or institutional investors, fund managers can pursue strategies not available to mutual funds such as short selling, heavy use of derivatives, and leverage, and are commonly structured as private partnerships. Hedge funds are typically open only to wealthy or institutional investors, are commonly structured as private partnerships, are only subject to minimal SEC regulation, and can pursue strategies not available to mutual funds such as short selling, heavy use of derivatives, and leverage. 52. Of the following types of mutual funds, an investor that wishes to invest in a diversified portfolio of stocks worldwide (including the U.S.) should choose A. international funds. B. global funds. C. regional funds. D. emerging market funds. E. ETFs because mutual funds do not exist that will provide the desired objective. International funds exclude the U.S. but global funds include the U.S. 53. Of the following types of mutual funds, an investor that wishes to invest in a diversified portfolio of foreign stocks (excluding the U.S.) should choose A. international funds. B. global funds. C. regional funds. D. emerging market funds. E. ETFs because mutual funds do not exist that will provide the desired objective. International funds exclude the U.S. but global funds include the U.S. 54. Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the S&P 500 should choose A. SPY. B. DIA. C. QQQQ. D. IWM. E. VTI. SPY tracks the S&P 500. 55. Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the Dow Jones Industrials should choose A. SPY. B. DIA. C. QQQQ. D. IWM. E. VTI. DIA tracks the DJIA. 56. Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the Nasdaq 100 should choose A. SPY. B. DIA. C. QQQQ. D. IWM. E. VTI. QQQQ tracks the Nasdaq 100. 57. Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the Russell 2000 should choose A. SPY. B. DIA. C. QQQQ. D. IWM. E. VTI. IWM tracks the Russell 2000. 58. Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the Wilshire 5000 should choose A. SPY. B. DIA. C. QQQQ. D. IWM. E. VTI. VTI tracks the Wilshire 5000. 59. Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the MSCI Japan Index should choose A. SPY. B. EWJ. C. QQQQ. D. IWM. E. VTI. EWJ tracks the MSCI Japan Index. 60. Of the following types of ETFs, an investor that wishes to invest in a diversified portfolio that tracks the MSCI France Index should choose A. SPY. B. EWJ. C. EWQ. D. IWM. E. VTI. EWQ tracks the MSCI France Index.