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Question 1 of 10
1. Question
Treasury bonds are fixed income securities issued by the US government with durations of greater than –
Correct
Treasury bonds are fixed income securities issued by the US government with durations of greater than 10 years
Incorrect
Treasury bonds are fixed income securities issued by the US government with durations of greater than 10 years
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Question 2 of 10
2. Question
Which of the following statement(s) is(are) true about Treasury bills?
I. Treasury bills are fixed income securities issued by the US government with durations of one year or less.
II. Treasury bills do not make coupon payments.
III. Treasury bills are issued at a discount from par so that the return occurs through the increase from the purchase price to par over the duration of the security.
IV. Treasury bills make semiannual coupon paymentsCorrect
Treasury bills are fixed income securities issued by the US government with durations of one year or less. Due to their short duration, these securities do not make coupon payments but are issued at a discount from par so that the return occurs through the increase from the purchase price to par over the duration of the security.
Incorrect
Treasury bills are fixed income securities issued by the US government with durations of one year or less. Due to their short duration, these securities do not make coupon payments but are issued at a discount from par so that the return occurs through the increase from the purchase price to par over the duration of the security.
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Question 3 of 10
3. Question
Which of the following statement(s) is(are) true about letters of intent and rights of accumulation?
I. Letters of intent and rights of accumulation are both tools that can be utilized by investors to achieve discounted “breakpoint” pricing on front-end sales charges for new purchases.
II. Letters of intent are much more beneficial for newer investors to a fund family who plan to make regular and/or significant contributions over the near- term (13 months).
III. Rights of accumulation benefit investors who have a long history with a given fund family and have accumulated a large amount of assets under management with the firm.
IV. Letters of intent and rights of accumulation are important to the fund family and these discounts are offered to entice new investors to channel a greater proportion of their invested assets to a given investment company and then to keep that investor happy by continuing to lower future front-end sales charges on subsequent purchases.Correct
Letters of intent and rights of accumulation are both tools that can be utilized by investors to achieve discounted “breakpoint” pricing on front-end sales charges for new purchases. However, they differ significantly in terms of who would benefit from each. Letters of intent are much more beneficial for newer investors to a fund family who plan to make regular and/or significant contributions over the near- term (13 months). Rights of accumulation, on the other hand, benefit investors who have a long history with a given fund family and have accumulated a large amount of assets under management with the firm. Both groups are important to the fund family and these discounts are offered to entice new investors to channel a greater proportion of their invested assets to a given investment company and then to keep that investor happy by continuing to lower future front-end sales charges on subsequent purchases.
Incorrect
Letters of intent and rights of accumulation are both tools that can be utilized by investors to achieve discounted “breakpoint” pricing on front-end sales charges for new purchases. However, they differ significantly in terms of who would benefit from each. Letters of intent are much more beneficial for newer investors to a fund family who plan to make regular and/or significant contributions over the near- term (13 months). Rights of accumulation, on the other hand, benefit investors who have a long history with a given fund family and have accumulated a large amount of assets under management with the firm. Both groups are important to the fund family and these discounts are offered to entice new investors to channel a greater proportion of their invested assets to a given investment company and then to keep that investor happy by continuing to lower future front-end sales charges on subsequent purchases.
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Question 4 of 10
4. Question
Mr. Smith submits a redemption request for his entire mutual fund balance at 2:00 p.m. on January 1. He currently holds 100 shares of Fund A. At 4:00, the market closes and Fund A’s NAV is calculated based on closing prices for each of the underlying securities and any applicable fund operating expenses. Let’s assume the NAV as of the close of business on January 1 is $10.00. What will be the amount of the liquidation?
Correct
The amount of the liquidation is 100 shares multiplied by $10 per share, for a total of $1,000.00.
Incorrect
The amount of the liquidation is 100 shares multiplied by $10 per share, for a total of $1,000.00.
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Question 5 of 10
5. Question
Which of the following statement(s) is(are) not true about Equity income fund?
I. Equity income mutual funds seek to provide return to investors through a combination of equity dividends and capital appreciation.
II. More of the fund’s returns will come from equity dividends and the fund will not rely as significantly upon capital appreciation as most other equity funds.
III. Equity income funds are typically more aggressive than a fund that provides return solely through capital appreciation.
IV. In order to provide a consistent and growing level of income through dividends, equity income funds typically invest in relatively stable companies with a long history of consistent and growing dividend yields.Correct
Equity income mutual funds seek to provide return to investors through a combination of equity dividends and capital appreciation. Proportionately, more of the fund’s returns will come from equity dividends and the fund will not rely as significantly upon capital appreciation as most other equity funds. Additionally, these funds are typically less aggressive than a fund that provides return solely through capital appreciation. In order to provide a consistent and growing level of income through dividends, equity income funds typically invest in relatively stable companies with a long history of consistent and growing dividend yields.
Incorrect
Equity income mutual funds seek to provide return to investors through a combination of equity dividends and capital appreciation. Proportionately, more of the fund’s returns will come from equity dividends and the fund will not rely as significantly upon capital appreciation as most other equity funds. Additionally, these funds are typically less aggressive than a fund that provides return solely through capital appreciation. In order to provide a consistent and growing level of income through dividends, equity income funds typically invest in relatively stable companies with a long history of consistent and growing dividend yields.
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Question 6 of 10
6. Question
Which of the following statement(s) is(are) true about Equity growth fund?
I. Equity growth funds seek to provide returns through capital appreciation.
II. Equity growth fund may hold some securities that pay modest dividends.
III. The dividends of the equity growth fund are not a significant source of returns for the fund.
IV. Investors in equity growth funds are typically more aggressive and may be investing over a longer time horizon or with a greater target return than investors in fixed income or equity income funds.Correct
Equity growth funds seek to provide returns through capital appreciation. While the fund may hold some securities that pay modest dividends, the dividends are not a significant source of returns for the fund. Instead, the portfolio manager and research team attempt to identify securities that will grow (and whose stock price will appreciate) at a rate greater than that which is implied through the current stock price. Investors in equity growth funds are typically more aggressive and may be investing over a longer time horizon or with a greater target return than investors in fixed income or equity income funds. These investors are also subject to greater risk through capital losses as the companies in which these funds invest are oftentimes less established and more volatile.
Incorrect
Equity growth funds seek to provide returns through capital appreciation. While the fund may hold some securities that pay modest dividends, the dividends are not a significant source of returns for the fund. Instead, the portfolio manager and research team attempt to identify securities that will grow (and whose stock price will appreciate) at a rate greater than that which is implied through the current stock price. Investors in equity growth funds are typically more aggressive and may be investing over a longer time horizon or with a greater target return than investors in fixed income or equity income funds. These investors are also subject to greater risk through capital losses as the companies in which these funds invest are oftentimes less established and more volatile.
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Question 7 of 10
7. Question
Which of the following statement(s) is(are) not true about Equity income/growth fund?
I. Equity income/growth funds seek to provide returns through a balanced combination of equity dividends and capital appreciation.
II. Stable large-cap equity securities are the most common type of investment in equity growth/income funds.
III. The equity/growth income fund differs from strictly an equity growth fund through its greater focus on providing for current income.
IV. The equity growth/income fund differs from strictly an equity income fund because equity income funds would often include bonds and equity securities with less expected return through capital appreciation.Correct
Equity income/growth funds seek to provide returns through a balanced combination of equity dividends and capital appreciation. Stable large-cap equity securities are the most common type of investment in equity growth/income funds because they are able to provide a significant source of current income through consistent divided yields while also retaining exposure to capital appreciation potential through increases in the price of the common stock. The equity/growth income fund differs from strictly an equity growth fund through its greater focus on providing for current income. Similarly, the equity growth/income fund differs from strictly an equity income fund because equity income funds would often include bonds and equity securities with less expected return through capital appreciation. This type of fund may appeal to an older investor who seeks some stability through current dividend income, but also needs to achieve a higher level of return than can be provided by bond yields alone.
Incorrect
Equity income/growth funds seek to provide returns through a balanced combination of equity dividends and capital appreciation. Stable large-cap equity securities are the most common type of investment in equity growth/income funds because they are able to provide a significant source of current income through consistent divided yields while also retaining exposure to capital appreciation potential through increases in the price of the common stock. The equity/growth income fund differs from strictly an equity growth fund through its greater focus on providing for current income. Similarly, the equity growth/income fund differs from strictly an equity income fund because equity income funds would often include bonds and equity securities with less expected return through capital appreciation. This type of fund may appeal to an older investor who seeks some stability through current dividend income, but also needs to achieve a higher level of return than can be provided by bond yields alone.
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Question 8 of 10
8. Question
Which of the following statement is true about Equity value funds?
Correct
Equity value funds seek to provide returns through capital appreciation on funds that are considered to be currently undervalued.
Incorrect
Equity value funds seek to provide returns through capital appreciation on funds that are considered to be currently undervalued.
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Question 9 of 10
9. Question
Which of the following statement(s) is(are) true about Equity blend/core fund?
I. Equity blend or core funds provide a mix of returns through investing in companies that could be considered either growth or value funds, or balanced between the two approaches.
II. Equity blend/core funds seek to provide the highest risk-adjusted return through investing in companies with the best potential risk-adjusted returns, regardless of whether they are undervalued or underestimated in terms of future growth.
III. Investors in blend or core funds can get the best funds from both approaches in a single fund.
IV. Equity blend/core fund may include a company whose price-to-earnings ratio is half that of its peers but is about to launch a new product that will improve its competitive position.Correct
Equity blend or core funds provide a mix of returns through investing in companies that could be considered either growth or value funds, or balanced between the two approaches. Instead of limiting the choice of underlying investments to specifically identifying growth or value companies, blend or core funds seek to provide the highest risk-adjusted return through investing in companies with the best potential risk-adjusted returns, regardless of whether they are undervalued or underestimated in terms of future growth. By not placing the restrictions on the source of the growth, investors in blend or core funds can get the best funds from both approaches in a single fund. Thus, the fund may include a company whose price-to-earnings ratio is half that of its peers but is about to launch a new product that will improve its competitive position.
Incorrect
Equity blend or core funds provide a mix of returns through investing in companies that could be considered either growth or value funds, or balanced between the two approaches. Instead of limiting the choice of underlying investments to specifically identifying growth or value companies, blend or core funds seek to provide the highest risk-adjusted return through investing in companies with the best potential risk-adjusted returns, regardless of whether they are undervalued or underestimated in terms of future growth. By not placing the restrictions on the source of the growth, investors in blend or core funds can get the best funds from both approaches in a single fund. Thus, the fund may include a company whose price-to-earnings ratio is half that of its peers but is about to launch a new product that will improve its competitive position.
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Question 10 of 10
10. Question
To provide diversification across the multiple asset classes, balanced funds will invest in a mixture of –
I. Growth equities
II. Value equities
III. Corporate bonds
IV. Government bondsBalanced funds will invest in a mixture of growth equities, value equities, corporate bonds, government bonds, and short-term instruments with a goal of providing diversification across these multiple asset classes.
Correct
Balanced funds will invest in a mixture of growth equities, value equities, corporate bonds, government bonds, and short-term instruments with a goal of providing diversification across these multiple asset classes.
Incorrect
Balanced funds will invest in a mixture of growth equities, value equities, corporate bonds, government bonds, and short-term instruments with a goal of providing diversification across these multiple asset classes.