ARE 143- It is not important to have a secondary market for mutual funds 1) It is not important to have a secondary market for mutual funds because: a) investors hold the securities till maturity. b) investors trade between themselves. c) investors sell their shares back to the company. d) banks will cash their shares as long as they have accounts at the bank. 2) Which of the following ETFâ€™s (exchange traded fund) provides exposure to 500 U.S.large-capitalization companies? a) Spider b) Clubs c) Cubes d) Diamonds 3) If a mutual fund holds a substantial amount of Treasury bills, this is probably a(an): a) tax-exempt fund. b) conservative bond fund. c) income fund d) money market mutual fund. 4) Which of the following statements regarding changes in bond prices relative to changes in market yields is true? a) Short-term bond prices will increase more than long-term bond prices if market yields increase. b) Short-term bond prices will increase less than long-term bond prices if market yields decrease. c) Short-term bond prices will increase more than long-term bond prices if market yields decrease. d) Short-term bond prices will remain constant and long-term bond prices will increase if market yieldsdecrease. 5) All of the following are interchangeable terms except for: a) discount rate b) coupon rate c) required rate of return d) capitalization rate 6) What is the method of selling Treasury bills at less than face value called? a) imputed basis b) par value method c) discount basis d) STRIP basis e) face value method 7) Municipal bonds that are secured by the full faith and credit of the issuer are referred to as which one of the following? a) general obligation bonds b) local taxation bonds c) fully funded bonds d) revenue bonds e) private activity bonds 8) Which one of the following statements correctly applies to STRIPS? a) STRIPS securities pay a fixed-rate, semiannual interest payment. b) A 10-year T-bond is broken into 20 STRIPS securities. c) Treasury securities are broken into STRIPS securities by brokers. d) STRIPS securities pay a variable-rate, semiannual interest payment. e) All STRIPS securities taken from the same Treasury security must be registered to the same owner. 9) a fund that is basically an index fund that trades like a closed-end fund is called a(n): a) open-end fund. b) money market fund. c) exchange-traded fund. d) mutual fund. e) depository receipt. 10) Shares in closed-end funds: a) can be resold to the fund at any time. b) are more popular than shares in open-end funds. c) may sell for more than the NAV. d) are referred to as mutual fund shares. e) cannot be resold. 11) Which one of the following costs can a mutual fund shareholder avoid by holding shares for an extended period of time? a) 12b-1 fee b) front-end load c) management fee d) contingent deferred sales charge e) trading costs 12) Debt issued by a trustee to purchase airplanes that will be leased to an airline would be classified as whichof the following? a) collateral trust bond b) equipment trust certificate c) transportation bond d) mortgage bond e) rolling stock certificate 13) Which one of the following is an account used to provide for scheduled redemptions of outstanding bonds? a) redemption fund b) sinking fund c) liquidation account d) serial account e) callable account 14) Capital gains are included in the return on an investment: a) when either the investment is sold or the investment has been owned for at least one year. b) only if the investment is sold and the capital gain is realized. c) whenever dividends are paid. d) whether or not the investment is sold. e) only if the investment incurs a loss in value or is sold. 15) 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(n): a) supplemental offering. b) seasoned equity offering c) initial public offer. d) market expansion offer. e) after-mar
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