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123 Cards in this Set
- Front
- Back
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Investing in mutual funds offers advantages of
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diversification, professional manangement, and the size of the initial investment
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An investment company pools funds from
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individual investors
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An investment company that will repurchase shares at any time is called an
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open-end fund
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An investment company that issues a fixed number of shares which can only be resold in the open stock market is called a
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closed-end fund
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The value of a load mutual fund's assets less its liabilities, divided by the number of shares outstanding is referred to as the fund's
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net asset value
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A 12b-1 fee is a fee charged by a mutual fund to cover
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marketing costs
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A fee that is charged at the time mutual fund shares are purchased by an investor is called a
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front-end load
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Term that refers to a measure of trading activity of a mutual fund
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The turnover for a mutual fund
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An open-end fund which invests solely in short-term debt obligations is called a
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money market mutual fund
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A fund that is basically an index fund that trades like a closed-end fund is called
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an exchange-traded fund
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Describes an investment company that generally has an unrestricted investment strategy and is not accessible to the general public.
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A hedge fund
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True of False: Mutual funds generally pay no taxes
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True. Mutual funds generally pay no taxes
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True of False: Investors receive the NAV when shares are sold for an open-end mutual fund which charges a front-end load.
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True. Investors receive the NAV when shares are sold for an open-end mutual fund which charges a front-end load.
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True of False: Shares of closed-end funds trade just like stocks.
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True. Shares of closed-end funds trade just like stocks.
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True of False: Shares in closed-end funds may sell for more than the NAV.
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True. Shares in closed-end funds may sell for more than the NAV.
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True of False: A mutual fund is owned by its shareholders.
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True. A mutual fund is owned by its shareholders.
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True of False: A mutual fund is created by an investment advisory firm.
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True. A mutual fund is created by an investment advisory firm.
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True of False: Mutual funds are generally created to generate fees for an advisory firm.
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True. Mutual funds are generally created to generate fees for an advisory firm.
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Investment advisory firms generally provide ________, _________, and ___________ to a mutual fund.
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marketing, record keeping, and investment research services
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An investment company will be treated as a "regulated investment company" by the Internal Revenue Service provided that:
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1.it invests almost all of its assets in bonds, stocks, and other securities
2. passes all its realized investment income through to its shareholders. |
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True of False: The income earned by a regulated investment company is taxable income for the fund's shareholders.
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True. The income earned by a regulated investment company is taxable income for the fund's shareholders.
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True of False: A mutual fund shareholder can avoid the contingent deferred sales charge (CDSC) by holding shares for an extended period of time
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True. A mutual fund shareholder can avoid the contingent deferred sales charge(CDSC) by holding shares for an extended period of time
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When the offering price and the NAV are the same for a fund what is true about the load fees?
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that a mutual fund is not charging a front-end load.
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Assume a mutual fund is a pure no-load fund, what fees should an investor still expect to incur?
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management fee and trading costs.
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True of False: Mutual fund trading costs increase in direct relation to the turnover rate.
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True. Mutual fund trading costs increase in direct relation to the turnover rate.
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The fee table found in a mutual fund prospectus includes what fees?
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12b-1 fee
redemption fee percentage management fee front-end load |
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The two best reasons for considering a load fund are:
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the preference for a particular fund manager
a specialized type of fund. |
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Money market mutual funds invest in securities that mature in ____ days or less.
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90 days or less
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The net asset value of a money market mutual fund is dependent upon the
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value of the fund's assets.
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Money market mutual funds can provide "triple-tax-free" income. The triple tax refers to:
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Federal
State Local |
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To determine the actual objective of a fund, you should primarily refer to the
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portfolio holdings
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The capital appreciation stock fund focuses on maximizing what?
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Share Price Appreciation
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The equity income stock fund focuses on maximizing what?
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Share Price Appreciation
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Small-cap funds focus more on capital appreciation than on what?
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Current Income generated
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he primary difference between an international fund and a global fund is
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he fact that a global fund invests in U.S. stocks while an international fund does not.
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You should purchase an emerging markets fund if you are interested in investing primarily in countries that have
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relatively new stock markets
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what type of fund concentrates on investing in one industry or one commodity?
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A Sector Fund
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A fund which tracks the S&P 500 would best be classified as an
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Index Fund
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ou want to purchase shares in a fund and also ensure that your money does not support firms that harm the environment. You should purchase a...
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social conscience fund.
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A general characteristic of a tax-managed fund is a
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low turnover rate.
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The distinguishing characteristic of a municipal bond fund is the...
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federally tax-free income.
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You wants to invest in a bond fund. She is a very conservative investor with a high marginal tax rate. A ________________ funds might be most suited for your situation.
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short-term municipal bond funds
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Flexible portfolio funds invests in both _____ and ______ and actively attempts to time the market.
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Stocks and Bonds
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Trading symbols for mutual funds end in which letter
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X
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While reviewing mutual fund reports, you notice that a fund is reported as "closed". The primary reason for closing a fund is that
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the fund has grown too large in size.
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a common characteristic of a closed-end fund but not of an open-end fund is the
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Discounted Price
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If you purchase shares in a closed-end fund at the initial offer price, you should expect to immediately see a (increase or decrease?) in the value of your investment.
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Decrease
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An ETF is best described as an
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index fund that trades like a closed-end fund
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Things can you do with an ETF that you cannot do with an open-end fund are
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sell at mid-day prices
short sell buy options on them |
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True of False: Exchange traded notes were first created to mimic s commodity index.
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True. Exchange traded notes were first created to mimic s commodity index.
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True of False: An ETN is an unsecured debt.
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True. An ETN is an unsecured debt.
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claims on shares held in a trust are
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ETFs
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A vast array of investment objectives applies
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Hedge Funds
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Locking up investor's money for at least two years will exempt a hedge fund from ?
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registering with the SEC
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True of False: A hedge fund may charge a special performance fee which commonly ranges from 20 to 40 percent of the fund's profits.
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True. A hedge fund may charge a special performance fee which commonly ranges from 20 to 40 percent of the fund's profits.
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Currently, the term "hedge fund" refers to
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any unregistered fund pursuing any type of investment style.
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True of False: A hedge fund may charge relatively high fees.
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True. A hedge fund may charge relatively high fees.
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Microsoft is issuing new shares of stock which will trade on NASDAQ. If Sue purchases 300 of these shares, the trade will occur in the: (Primary or Secondary Market?)
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Primary Market
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You just placed an order with your broker to purchase 500 of the outstanding shares of GE. This purchase will occur in the: (Primary or Secondary Market?)
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Secondary Market
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Hi-Tek Shoes is a private firm that has decided to issue shares of stock to the general public. This stock issue will be referred to as an:
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Initial Public Offering (IPO)
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A firm that specializes in arranging financing for companies is called an:
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Investment Banking Firm
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The process of purchasing newly issued shares from the issuer and reselling those shares to the general public is called:
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Underwriting
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The financing provided for new ventures that are frequently high-risk investments is referred to as
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Venture Capital
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Marco Painting Supplies is a publicly-traded firm with 250,000 shares of stock outstanding. If the firm issues an additional 10,000 shares, those shares will be referred to as a:
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Seasoned Equity Offering (SEO)
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Under the provisions of a general cash offer, shares of stock are offered to the general public on a __________ basis.
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First-Come
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A public offering of securities which are offered first to current shareholders is called a:
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Rights Offer
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The difference between the price an underwriter pays an issuer and the underwriter's offering price is called the:
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Spread
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When a group of underwriters jointly work together to sell a new issue of securities, the underwriters form a
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Syndicate
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When an underwriting syndicate purchases an entire issue of new securities and accepts the risk of unsold shares, the underwriting is known as a
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Full Commitment Underwriting
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When the issuer assumes the risk for any shares the underwriters cannot sell, the underwriting is known as a
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Best Efforts Underwriting
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When the price of newly issued shares is determined by competitive bidding the underwriting is known as a
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Dutch Auction Underwriting
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The federal agency which regulates the financial markets in the U.S.
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Securities and Exchange Commission
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The document that must be prepared in order to receive approval for a stock offering is called a
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Prospectus
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A preliminary document provided to investors who are interested in a stock offering is called a
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"Red Herring"
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A trader who buys and sells from his or her inventory is called a:
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Securities Dealer
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An intermediary who arranges trades between a buyer and a seller describes a:
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Broker
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The price an individual investor receives if he or she sells shares of stock.
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Bid Price
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The price an individual investors pays when buying shares of stock outstanding.
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Ask Price
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The profit a dealer makes on a purchase and resale of shares of stock is called the:
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Spread
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An owner of a trading license on the NYSE is called a
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Member
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A NYSE member who executes customer orders on the exchange floor is called a
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commission broker
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The party who serves as a dealer for a few securities on an exchange floor and is obligated to maintain an orderly market for those securities is called a
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Specialist
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A _____________broker executes orders on behalf of ____________brokers in exchange for a fee.
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floor broker, commission brokers
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an electronic system which transmits orders directly to specialists
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SuperDOT
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A NYSE member who trades only for his or her own account is called a
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Floor Trader
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The location on an exchange floor where a particular security trades is called a
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Specialist's Post
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You want to sell shares of stock at the current price. You should place a _____ order
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Market order
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An order to buy shares of stock at a stated price or less is called a ___________ order
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limit order
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An order to sell that involves a preset trigger point is called a ______ oder
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Stop
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A market centered on dealers buying and selling for their own inventories is called an ____ market.
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OTC (over the counter)
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A web site used by investors to trade directly with other investors is an
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Electronic Communication Network (ECN)
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The highest bid and lowest asked quotes offered by securities dealers.
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Inside Quotes
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Market in which exchange-listed securities trade is referred to as the third market.
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Off Exchange
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The market where individual investors directly trade exchange-listed securities with other individual investors is referred to as the
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Fourth Market
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Stock market index in which stocks are held in proportion to their share price.
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Price-Weighted Index
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When stocks are held in an index in proportion to their total company market value, the index is _______ weighted.
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Value Weighted
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An index is valued on a daily basis. However, some stocks in this particular index have not traded recently. As a result, this index suffers from ________.
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Index Staleness
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What Stock Exchange is part of a firm that also operates a stock exchange in Amsterdam.
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NYSE
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Common sources of venture capital are:
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private individuals, university endowment funds, and insurance companies.
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The period that is commonly found in an IPO underwriting contract is six months.
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"Lock-Up" Period
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Frequently provided in stages with each stage financed by a different venture capitalist.
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Venture Capital
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All rules have been followed to allow for full disclosure of information can be assumed when the SEC approves an:
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IPO Registration
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Sale of newly issued shares by the issuer to a shareholder occurs in the:
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Primary Market
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You are an individual investor. You purchase shares at the (ask/bid) price and sell at the (ask/bid) price.
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Ask, Bid
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The current structure of the NYSE is a
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Publicly Traded Company (NYX)
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In 2007, NYSE Holdings merged with
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Euronext
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The _____ system has lessened the role of floor brokers
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SuperDOT
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Who has the greatest duty to provide liquidity to the financial market?
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The Specialists
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To be listed on the NYSE, a firm must have:
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at least pre-tax aggregate earnings of $10 million in the previous 3 years
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The duties of a specialist include:
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maintaining an orderly market
providing liquidity to the market. |
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After the trigger point is reached, a stop-loss order will be executed at the _____ price
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Market
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Stop-buy orders is frequently used as a means to limit losses resulting from a _______ trade.
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Short Sale
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The NYSE uptick rule prevents _______ following an uptick.
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Short-Selling
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NASDAQ dealers post the number of shares they will commit to buy or sell in addition to their __________ and ________ prices.
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bid and ask prices
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NASDAQ characteristics include a:
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computer network and multiple market makers.
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Which has more companies listed: The NASDAQ or NYSE
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NASDAQ
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The orders displayed on NASDAQ are placed by who? Market Makers and/or ECN
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Both Market Makers and ECN
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True of False: Stocks which are listed on the NYSE can also be listed on NASDAQ.
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True, Stocks which are listed on the NYSE can also be listed on NASDAQ.
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True of False: The stocks listed on the Pink Sheets do not have to file financial statements with the SEC.
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True The stocks listed on the Pink Sheets do not have to file financial statements with the SEC.
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Common characteristic of the OTCBB market include:
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Low stock prices
high percentage price changes, Thinly traded securities. |
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How many firms make up the DJIA?
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30 firms make up the DJIA
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True of False: Stock market indexes vary in the type of stocks included.
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True. Stock market indexes vary in the type of stocks included.
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Is the S&P 500 index is value-weighted or price-weighted?
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The S&P 500 index is value-weighted.
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