Question

8. What type of mutual fund issues "redeemable securities" meaning that the fund stands ready to buy or sell the shares at their net asset value WITH a transaction fee? a. No-load, closed-end fund b. No-load, open-end fund C. Load, closed-end fund d. Load, open-end fund e. None of the above 9. A return series has an arithmetic mean of 10.5% and standard deviation of 13%. Assuming the returns are normally distributed what is the range of returns that an investor would expect to receive 90% of the time? a. 10.5% to 13% b. -2.5% to 23.5% 28.5 to 49.5% d. 15.5% to 36.5% e. 0% to 10.5% 10. You purchased 75 shares of Basket Company for $42 a share. One share of the stock is currently trading between $52 and $53 and you placed a stop loss order at $47. If the stock price drops to $40 a share, what is your return on this investment? 8.7% 9.2% 10.3% 11.9% 12.8% Important reasons for constructing a policy statement include: Helps investors decide on realistic investment goals Create a standard by which to judge the performance of the portfolio manager Develop an instrument to judge risk Choices a and b All of the above 12.. What would the equivalent taxable yield be on an investment that offers a 6 percent tax exempt yield? Assume a marginal tax rate of 28%. 0.125% 7.20% 6.48% 8.33% 32.14%

Answer 1

8 . Load Open end Fund

9. 2.5% to 23.5% - The Arithmatic mean is 10.5% and SD is 13% , means the returns can range on either side of the AM by 13% . All other options do not consider return below and above 10.5% together.

10. 11.9% - Once the stop loss hits the shares will be sold at 47, leading to earning 5$ per share on 42$ investment, resulting 11.9% return.

11. All of the above.

12. 8.33% , after deducting tax rate of 28%, the post tax yield will come to 6%.