Hedge funds can short sell securities, whereas most mutual funds cannot.

A hedge fund that goes long in a convertible bond and short in the equity of the same firm is employing a market neutral arbitrage strategy.

The shares of a closed-end fund with market value of assets of $200 million and 2 million shares outstanding will always trade at a market value of $100 per share.

If you invest $10,000 in a mutual fund with a NAV of $50 per share and a 5.5% back-end load, you will receive less than 200 shares in the fund.

Because of their ability to hedge, the subprime mortgage crisis did not cause any significant losses to hedge funds.

Offshore hedge funds are not subject to taxation on fund distributions nor to U.S. estate taxes.

The market value of a fund's net assets divided by the number of mutual fund shares outstanding is called the NAV of the fund.

Open-end fund shares often trade at a discount or premium relative to NAV.

Load funds typically provide investors with higher rates of return and offer more services such as check writing, transfers between funds, etc., than no load funds.

ETFs are a direct competitor to ___________.

As the economy weakens, one would expect investment in ____________ funds to increase and investment in _____________ funds to decrease, ceteris paribus.

Hybrid mutual funds normally invest significant amounts in

About ___________ of retirement plan investments are in so-called institutional funds, which are funds that manage retirement plans for an institution's employees.

Money market mutual funds (MMMFs) have caused disintermediation at banks at times. This is because MMMFs

Actively managed funds find it difficult to consistently earn higher risk-adjusted returns than a broad stock market index. The difference in return between actively managed funds and passively managed index funds can be explained by which of the following?

I. Lower expense ratios at index funds

II. Higher turnover ratios at index funds

III. Differences in returns in sectors of the market and the overall market return

By type of fund, there are more ______________ funds than any other.

The largest proportion of long-term mutual fund assets is held by ___________________.

The market value of a mutual fund's assets divided by the number of fund shares outstanding is equal to the

Rank the following in asset size from largest to smallest in 2010.

1. Mutual funds

2. Insurance companies

3. Commercial banks

You have $10,000 to invest and you are considering investing in a fund. The fund charges a front-end load of 5.75% and an annual expense fee of 1.25% of the average asset value over the year. You believe the fund's gross rate of return will be 11% per year. If you make the investment, what should your investment be worth in one year?

A fund has a NAV of $30 per share but the shares are currently selling for $32. This fund must be

An open-end mutual fund owns 1500 share of Krispy Kreme priced at $12. The fund also owns 1,000 shares of Ben & Jerry's priced at $43, and 2,000 shares of Pepsi priced at $50. The fund itself has 3,500 of its own shares outstanding. What is the NAV of a fund's share?

You have $16,000 to invest in a mutual fund with a NAV = $45. You choose a fund with a 4% front load, a 1% management fee, and a 0.25% 12b-1 fee. Assume that the management and 12b-1 fees are charged on year-end assets. The gross annual return on the fund's shares was 9%. What was your net annual rate of return to the nearest basis point?

Investors pay load charges to receive

A money market mutual fund's total assets increase from $100 to $105 when the fund has 100 shares outstanding. Which of the following will happen?

The primary regulator of mutual funds is the

You have $12,500 to invest and you are considering investing in Fund X. The fund charges a front-end load of 3% and an annual expense fee of 2.25% of the ending asset value over the year. You believe the fund's gross rate of return will be 8% per year. If you make the investment, what should your investment be worth in one year?

A 12b-1 fee is an implicit load charge

Households are the largest owners of money market mutual funds

Hedge funds and REITS often employ significant amounts of leverage, but standard open-end mutual funds do not.

The Federal Mutual Fund Commission (FMFC) is the primary regulator of the mutual fund industry.

Open-end mutual funds guarantee

Hedge funds charge expense fees and performance fees. The average performance fee on hedge funds is ____________.

You have $15,000 to invest in a mutual fund. You choose a fund with a 3.5% front load, a 1.75% management fee, and a 0.5% 12b-1 fee. Assume that the management and 12b-1 fees are charged on year-end assets for simplicity. The gross annual return on the fund's shares was 12.50%. What was your net annual rate of return to the nearest basis point?

Which one of the following fund types is likely to have the lowest annual expense ratio?

A(n) ___________ fund must hold substantial cash reserves in order to meet fund redemptions from shareholders.

You wish to invest $17,445 in a mutual fund with a NAV of $26.03. The fund charges a front-end load of 4.50%. How many fund shares will you receive?

A fund that has a fixed number of shares outstanding and is traded on an exchange is called a(n)

ETFs have several advantages over index funds including the ability to:

1. trade throughout the day at continuously updated prices.

2. purchase ETF shares on margin.

3. sell ETF shares short.

4. sell the shares back to the fund.

You are considering purchasing shares in a typical mutual fund that has three classes of shares outstanding: Class A, Class B, and Class C. If you purchase Class A shares you will pay

You are considering purchasing shares in a typical mutual fund that has three classes of shares outstanding: Class A, Class B, and Class C. If you purchase Class C shares you will pay

One of the recent trading abuses in the mutual fund industry was allowing selected investors to rapidly trade in and out of a mutual fund in order to profit on stale prices. This practice is called