All Related Questions of Mutual Fund

Q: The controller for Clint Eastwood Co. is attempting to determine the

The controller for Clint Eastwood Co. is attempting to determine the amount of cash to be reported on its December 31, 2014, balance sheet. The following information is provided. 1. Commercial savi...

Q: Presented below are a number of independent situations.1.

Presented below are a number of independent situations. 1. Checking account balance $925,000; certificate of deposit $1,400,000; cash advance to subsidiary of $980,000; utility deposit paid to gas...

Q: The following are situations that may violate the Code of Professional Conduct

The following are situations that may violate the Code of Professional Conduct. Assume, in each case, that the CPA is a partner. 1. Contel, CPA, advertises in the local paper that his firm does the au...

Q: For the following scenarios, describe a hedging strategy using futures contracts

For the following scenarios, describe a hedging strategy using futures contracts that might be considered. a. A public utility is concerned about rising costs. b. A candy manufacturer is concerned abo...

Q: Several independent situations follow. l. Chequing account balance $

Several independent situations follow. l. Chequing account balance $625,000; certificate of deposit $1.1 million; cash advance to subsidiary $980,000; utility deposit paid to gas company $ 180. 2. Che...

Q: Erika and Kitty, who are twins, just received $30

Erika and Kitty, who are twins, just received $30,000 each for their 25th birthday. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her “early ret...

Q: A mutual fund manager has a $20 million portfolio with a

A mutual fund manager has a $20 million portfolio with a beta of 1.5. The risk-free rate is 4.5%, and the market risk premium is 5.5%. The manager expects to receive an additional $5 million, which sh...

Q: The Damon Investment Company manages a mutual fund composed mostly of speculative

The Damon Investment Company manages a mutual fund composed mostly of speculative stocks. You recently saw an ad claiming that investments in the funds have been earning a rate of return of 21%. This...

Q: During 2016, your clients, Mr. and Mrs. Howell

During 2016, your clients, Mr. and Mrs. Howell, owned the following investment assets: a. Go to the IRS web site (www.IRS.gov) and download the most current version of Form 8949 and Schedule D. Use Fo...

Q: Big Sky Sports sells hunting and fishing equipment and provides guided hunting

Big Sky Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Big Sky Sports is owned and operated by Joe Flannery, a well-known sports enthusiast and hunter. Joe’s...

Q: Classify the following as a transaction reported in a sub-component

Classify the following as a transaction reported in a sub-component of the current account, or the capital and financial accounts of the two countries involved: a. A U.S. food chain imports wine from...

Q: How would the following transactions affect U.S. net capital

How would the following transactions affect U.S. net capital outflow? Also, state whether each involves direct investment or portfolio investment. a. An American cellular phone company establishes an...

Q: In January 2017, Ezra purchased 2,000 shares of Gold

In January 2017, Ezra purchased 2,000 shares of Gold Utility Mutual Fund for $20,000. In June, Ezra received an additional 100 shares as a dividend, in lieu of receiving $1,000 in cash dividends. In D...

Q: George has $5000 to invest in a mutual fund.

George has $5000 to invest in a mutual fund.The expected return on mutual fund A is 15 percent and the expected return on mutual fund B is 10 percent.Should George pick mutual fund A or fund B?

Q: Each of the following items was incurred by Jose, the cash

Each of the following items was incurred by Jose, the cash basis, calendar year decedent. Under the terms of the will, Dora took immediate ownership in all of Jose’s assets, except t...

Q: What is the main advantage of holding a stock mutual fund rather

What is the main advantage of holding a stock mutual fund rather than an individual stock?

Q: During the boom years of 2010–2014, ace mutual fund

During the boom years of 2010–2014, ace mutual fund manager Diana Sauros produced the following percentage rates of return. Rates of return on the market are given for comparison.
Calculate the ave...

Q: Dear Financial Adviser, My spouse and I are each

Dear Financial Adviser, My spouse and I are each 62 and hope to retire in three years. After retirement we will receive $7,500 per month after taxes from our employers’ pension plans and $1,500 per...

Q: In Section 30-4 we described a three-month bill

In Section 30-4 we described a three-month bill that was issued on an annually compounded yield of 5.16%. Suppose that one month has passed and the investment still offers the same annually compounded...

Q: Legs Diamond owns shares in a Vanguard Index 500 mutual fund worth

Legs Diamond owns shares in a Vanguard Index 500 mutual fund worth $1 million on July 15. (This is an index fund that tracks the Standard and Poor’s 500 Index.) He wants to cash in now, but his accoun...

Q: Don Mason and Beth Daley were managers and members of Pacific Beach

Don Mason and Beth Daley were managers and members of Pacific Beach Developers, LLC (PBD), a start-up real estate development company focusing on rehabilitating older properties for increased rental v...

Q: Edward Johnson III, the CEO and principal owner of the world’s

Edward Johnson III, the CEO and principal owner of the world’s largest mutual fund company, Fidelity Investments, Inc., was a longtime tennis buddy of Richard Larson. In 1995, Johnson asked Larson, wh...

Q: How would the following transactions affect U.S. net capital

How would the following transactions affect U.S. net capital outflow? Also, state whether each involves direct investment or portfolio investment. a. An American cellular phone company establishes an...

Q: Shortly after Steve graduated from college, he considered a whole life

Shortly after Steve graduated from college, he considered a whole life insurance policy that would provide $10,000 in life insurance protection and accumulate a cash value of twice his current annual...

Q: Towerton Financial Services13 Towerton Financial Services, a brokerage firm,

Towerton Financial Services13 Towerton Financial Services, a brokerage firm, started with a focus on stock trading and mutual funds. As the business grew, Towerton diversified into two new product li...

Q: No doubt, Guy Enright was apprehensive as he talked to the

No doubt, Guy Enright was apprehensive as he talked to the mysterious stranger on the phone. At the time, Enright, a British citizen and Chartered Accountant, was working on an unusual engagement for...

Q: With your help, Dave and Sharon Sampson have now established a

With your help, Dave and Sharon Sampson have now established a financial plan. Among their key financial planning decisions were the following: • Budgeting. They decided to revise their budget to mak...

Q: With your help, Dave and Sharon Sampson have now established a

With your help, Dave and Sharon Sampson have now established a financial plan. Among their key financial planning decisions were the following: • Budgeting. They decided to revise their budget to mak...

Q: With your help, Dave and Sharon Sampson have now established a

With your help, Dave and Sharon Sampson have now established a financial plan. Among their key financial planning decisions were the following: • Budgeting. They decided to revise their budget to mak...

Q: In the past, some mutual funds often engaged in a practice

In the past, some mutual funds often engaged in a practice called “after-hours trading” that allowed some of their larger shareholders to reap profits or avoid losses in a manner not available to all...

Q: Ronnie owns 600 shares of a stock mutual fund. This year

Ronnie owns 600 shares of a stock mutual fund. This year he received dividend distributions of 60 stock mutual fund shares ($40 per share) and long-term capital gain distributions of 45 stock mutual f...

Q: Describe the three ways a mutual fund can generate returns for investors

Describe the three ways a mutual fund can generate returns for investors.

Q: What should investors consider when deciding whether to purchase shares of a

What should investors consider when deciding whether to purchase shares of a mutual fund? What characteristics of a mutual fund should be considered? Briefly discuss each characteristic.

Q: Discuss diversification among mutual funds. Describe some strategies that make diversification

Discuss diversification among mutual funds. Describe some strategies that make diversification more effective. What is a mutual fund supermarket?

Q: What factors do you need to consider when deciding whether to add

What factors do you need to consider when deciding whether to add mutual fund investing to your financial plan?

Q: What are mutual funds? What two broad categories of mutual funds

What are mutual funds? What two broad categories of mutual funds exist, and how are they different? Do investors select the securities the mutual fund invests in?

Q: Over the last month, the Sampsons have been struggling with how

Over the last month, the Sampsons have been struggling with how to invest their savings to support their children’s college education. They previously considered stocks and bonds and are now seriously...

Q: Over the last month, the Sampsons have been struggling with how

Over the last month, the Sampsons have been struggling with how to invest their savings to support their children’s college education. They previously considered stocks and bonds and are now seriously...

Q: Over the last month, the Sampsons have been struggling with how

Over the last month, the Sampsons have been struggling with how to invest their savings to support their children’s college education. They previously considered stocks and bonds and are now seriously...

Q: The Sampsons have been evaluating methods for investing money that will ultimately

The Sampsons have been evaluating methods for investing money that will ultimately be used to support their children’s college education. They have concluded that a mutual fund is better suited to the...

Q: The Sampsons have been evaluating methods for investing money that will ultimately

The Sampsons have been evaluating methods for investing money that will ultimately be used to support their children’s college education. They have concluded that a mutual fund is better suited to the...

Q: The Sampsons have been evaluating methods for investing money that will ultimately

The Sampsons have been evaluating methods for investing money that will ultimately be used to support their children’s college education. They have concluded that a mutual fund is better suited to the...

Q: With your help, Dave and Sharon Sampson have now established a

With your help, Dave and Sharon Sampson have now established a financial plan. Among their key financial planning decisions were the following: • Budgeting. They decided to revise their budget to mak...

Q: If Hope (from problem 1) had invested the same amount

If Hope (from problem 1) had invested the same amount of money in a no-load fund with the same price per share, how many shares could she have purchased? Data from Problem 1: Hope invested $9,...

Q: Mark owns a mutual fund with a NAV of $45.

Mark owns a mutual fund with a NAV of $45.00 per share and expenses of $1.45 per share. What is the expense ratio for Mark’s mutual fund?  

Q: Hope (from problem 1) later sells her shares in the

Hope (from problem 1) later sells her shares in the mutual fund for $37 per share. What would her return be in problems 1 and 2? Data from Problem 1: Hope invested $9,000 in a mutual fund...

Q: Hope invested $9,000 in a mutual fund when the

Hope invested $9,000 in a mutual fund when the price per share was $30. The fund has a load fee of $300. How many shares did she purchase?

Q: A key factor that an auditor provides is independence. The AICPA

A key factor that an auditor provides is independence. The AICPA Code of Professional Conduct states that “a member in public practice should be independent in fact and appearance when providing audit...

Q: Should an investor expect a mutual fund to outperform the market?

Should an investor expect a mutual fund to outperform the market? If not, why should the investor buy the shares?

Q: How may beta coefficients be used to standardize returns for risk to

How may beta coefficients be used to standardize returns for risk to permit comparisons of mutual fund performance?

Q: An investor buys shares in a mutual fund for $20 per

An investor buys shares in a mutual fund for $20 per share. At the end of the year the fund distributes a dividend of $0.58, and after the distribution the net asset value of a share is $23.41. What w...

Q: What is the difference between an individual’s forecasted balance sheet and forecasted

What is the difference between an individual’s forecasted balance sheet and forecasted cash budget? Which of the following should be part of an individual’s balance sheet and which should be part of t...

Q: Consider the following four investments. a) You invest $

Consider the following four investments. a) You invest $3,000 annually in a mutual fund that earns 10 percent annually, and you reinvest all distributions. How much will you have in the account at the...

Q: If an investor buys shares in a no-load mutual fund

If an investor buys shares in a no-load mutual fund for $31.40 and the share appreciate to $44.60 in a year, what would be the percentage return on the investment? If the fund charges an exit fee of 1...

Q: Suppose you are still committed to owning a $170,000

Suppose you are still committed to owning a $170,000 Ferrari (see Problem 9). If you believe your mutual fund can achieve a 12 percent annual rate of return and you want to buy the car in 9 years on t...

Q: You recently graduated from college, and your job search led you

You recently graduated from college, and your job search led you to S&S Air. Because you felt the company’s business was taking off, you accepted a job offer. The first day on th...

Q: Harry and Freddi, a married couple, purchased 100 shares of

Harry and Freddi, a married couple, purchased 100 shares of Opaque Mutual Fund in 2002 for $2,800 as joint tenants with the right of survivorship. Freddi dies during the current year. Fair market va...

Q: During 2017, Roberto sold 830 shares of Casual Investor Mutual fund

During 2017, Roberto sold 830 shares of Casual Investor Mutual fund for $8.875 per share. The shares were purchased on the following dates: Date Shares Price  May 31, 2013 400 $9.375  Septem...

Q: On January 1, the shares and prices for a mutual fund

On January 1, the shares and prices for a mutual fund at 4:00 p.m. are as follows: Stock 3 announces record earnings, and the price of stock 3 jumps to $32.44 in after-market trading. If the fund (i...

Q: A mutual fund reported year-end total assets of $1

A mutual fund reported year-end total assets of $1,508 million and an expense ratio of 0.90%. What total fees is the fund charging each year?

Q: On January 1 a mutual fund has the following assets and prices

On January 1 a mutual fund has the following assets and prices at 4:00 p.m. Calculate the net asset value (NAV) for the fund. Assume that 8,000 shares are outstanding for the fund.

Q: A mutual fund charges a 5% upfront load plus reports an

A mutual fund charges a 5% upfront load plus reports an expense ratio of 1.34%. If an investor plans on holding a fund for 30 years, what is the average annual fee, as a percent, paid by the investors...

Q: A mutual fund offers “A” shares, which have a

A mutual fund offers “A” shares, which have a 5% upfront load and an expense ratio of 0.76%. The fund also offers “B” shares, which have a 3% back-end load and an expense ratio of 0.87%. Which shares...

Q: What regulatory changes have been adopted or are being considered to deal

What regulatory changes have been adopted or are being considered to deal with abuses in the mutual fund industry?

Q: Considering the discussion of market efficiency from Chapter 6, discuss whether

Considering the discussion of market efficiency from Chapter 6, discuss whether you should be willing to pay high fees to mutual fund investment managers.

Q: Discuss why a mutual fund family may find it beneficial to offer

Discuss why a mutual fund family may find it beneficial to offer 50 or 60 different stock mutual funds.

Q: You purchase shares in an investment company such as a mutual fund

You purchase shares in an investment company such as a mutual fund for $35 a share. The fund makes the following cash payments (“distributions”): At the end of the...

Q: You invest $100 in a mutual fund that grows 10 percent

You invest $100 in a mutual fund that grows 10 percent annually for four years. Then the fund experiences an exceptionally bad year and declines by 60 percent. After the bad year, the fund resumes its...

Q: a) A closed-end investment company is currently selling for

a) A closed-end investment company is currently selling for $10 and its net asset value is $10.63. You decide to purchase 100 shares. During the year, the company distributes $0.75 in dividends. At en...

Q: An investor buys shares in a mutual fund for $20 per

An investor buys shares in a mutual fund for $20 per share. At the end of the year the fund distributes a dividend of $0.58, and after the distribution the net asset value of a share is $23.41. What w...

Q: Why can a closed-end investment company sell for a discount

Why can a closed-end investment company sell for a discount from net asset value but a mutual fund cannot sell for a discount?

Q: Why may investing in an ETF such as the various iShares be

Why may investing in an ETF such as the various iShares be preferable to acquiring shares in a mutual fund that makes foreign investments?

Q: Should an investor expect a mutual fund to outperform the market?

Should an investor expect a mutual fund to outperform the market? If not, why should the investor buy the shares?

Q: How may beta coefficients be used to standardize returns for risk to

How may beta coefficients be used to standardize returns for risk to permit comparisons of mutual fund performance?

Q: If an investor buys shares in a no-load mutual fund

If an investor buys shares in a no-load mutual fund for $31.40 and the share appreciate to $44.60 in a year, what would be the percentage return on the investment? If the fund charges an exit fee of 1...

Q: Consider the following four investments. a) You invest $

Consider the following four investments. a) You invest $3,000 annually in a mutual fund that earns 10 percent annually, and you reinvest all distributions. How much will you have in the account at the...

Q: Your clients, Eva and Walther Sachs, operate a successful catering

Your clients, Eva and Walther Sachs, operate a successful catering business specializing in Germanic and eastern European foods. It is a family business with part-time workers during peak periods. Mos...

Q: The controller for Weinstein Co. is attempting to determine the amount

The controller for Weinstein Co. is attempting to determine the amount of cash and cash equivalents to be reported on its December 31, 2012, balance sheet. The following information is provided. 1. Co...

Q: Presented below are a number of independent situations. Instructions

Presented below are a number of independent situations. Instructions For each individual situation, determine the amount that should be reported as cash. If the item(s) is not reported as cash, expla...

Q: Mick Garcia, a certified financial planner (CFP), has been

Mick Garcia, a certified financial planner (CFP), has been asked by a client to invest $250,000. This money may be placed in stocks, bonds, or a mutual fund in real estate. The expected return on inve...

Q: E.F. Lynch Company is a diversified investment company with

E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended J...

Q: Crazy Mountain Sports sells hunting and fishing equipment and provides guided hunting

Crazy Mountain Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Crazy Mountain is owned and operated by Karl Young, a well-known...

Q: The James Bond Fund is a mutual fund (open-end

The James Bond Fund is a mutual fund (open-end investment company) with an objective of maximizing income from a widely diversified corporate bond portfolio. The fund has a policy of remaining investe...

Q: Statisticians use the Greek letter beta to signify the slope coefficient in

Statisticians use the Greek letter beta to signify the slope coefficient in a linear relation. Financial economists use this same Greek letter β to signify stock-price risk because betas are the slope...

Q: The Walt Disney Company is a diversified worldwide entertainment company with operations in

The Walt Disney Company is a diversified worldwide entertainment company with operations in four business segments: media networks, parks and resorts, studio entertainment and consumer products. The m...

Q: Daryl Kearns saved $240,000 during the 30 years that

Daryl Kearns saved $240,000 during the 30 years that he worked for a major corporation. Now he has retired at the age of 60 and has begun to draw a comfortable pension check every month. He wants to e...

Q: Give an example of how statistics might be useful to the person

Give an example of how statistics might be useful to the person in the scenario. a. A personnel executive is examining job turnover by gender in different restaurants in a fast food chain. b. An intr...

Q: For the following scenarios, describe a hedging strategy using futures contracts

For the following scenarios, describe a hedging strategy using futures contracts that might be considered. a. A public utility is concerned about rising costs. b. A candy manufacturer is concerned abo...

Q: You recently graduated from college, and your job search led you

You recently graduated from college, and your job search led you to East Coast Yachts. Because you felt the company’s business was seaworthy, you accepted a job offer. The first day...

Q: Dawn Browne, an investment broker, has been approached by client

Dawn Browne, an investment broker, has been approached by client Jack Thomas about the risk of his investments. Dawn has recently read several articles concerning the risk factors that can potentially...

Q: You have been at your job with East Coast Yachts for a

You have been at your job with East Coast Yachts for a week now and have decided you need to sign up for the company’s 401(k) plan. Even after your discussion with Sarah Brown, the B...

Q: 1. A mutual fund in which new shares are issued and

1. A mutual fund in which new shares are issued and redeemed by the investment company at the request of investors is called a (n) ____________ fund. a. closed end b. open-end c. load d. no-load 2....

Q: 1. The major reasons why investors purchase mutual funds are professional

1. The major reasons why investors purchase mutual funds are professional management and diversification. 2. Shares in a closed-end mutual fund are issued by the investment company only when the fund...

Q: Choose either the Invesco Charter (symbol CHTRX) mutual fund or

Choose either the Invesco Charter (symbol CHTRX) mutual fund or the Fidelity Fifty (symbol FFTYX) mutual fund. Then describe how each of the following sources of information could help you evaluate o...

Q: Assume that one year ago, you bought 120 shares of a

Assume that one year ago, you bought 120 shares of a mutual fund for $33 a share, you received a $0.60 per-share capital gain distribution during the past 12 months, and the market value of the fund i...

Q: The Western Capital Growth mutual fund has Total assets: $

The Western Capital Growth mutual fund has Total assets: $750,000,000 Total liabilities: $7,200,000 Total number of shares: 24,000,000 What is the fund’s net asset value (NAV)?

Q: 1. It has been suggested by Jamie Lee and Ross’ professional

1. It has been suggested by Jamie Lee and Ross’ professional investment counselor to perform a financial check-up as the first step in investing in mutual funds, even though they are investing $50,000...

Q: Three years ago, James Matheson bought 200 shares of a mutual

Three years ago, James Matheson bought 200 shares of a mutual fund for $23 a share. During the three-year period, he received total income dividends of $0.92 per share. He also received total capita...

Q: Describe how each of the following sources of investment information could help

Describe how each of the following sources of investment information could help evaluate a mutual fund investment.

Q: In the table below indicate how each of the key terms affects

In the table below indicate how each of the key terms affects a mutual fund investment and how each would be taxed.

Q: Obtain a mutual fund prospectus to determine the options you can use

Obtain a mutual fund prospectus to determine the options you can use to purchase and redeem shares. a. Which of the purchase options would appeal to you? Why? b. Assuming that you are now retireme...

Q: During one three-month period, Matt Roundtop’s mutual fund grew

During one three-month period, Matt Roundtop’s mutual fund grew by $6,000. If he withdraws 35 percent of the growth, how much will he receive?

Q: Ted Riley owns a 2012 Lexus worth $40,000.

Ted Riley owns a 2012 Lexus worth $40,000. He owns a home worth $275,000. He has a checking account with $800 in it and a savings account with $1,900 in it. He has a mutual fund worth $110,000. His...

Q: This chapter explored a number of different classifications or types of mutual

This chapter explored a number of different classifications or types of mutual funds. a. Based on your age and current financial situation, which type of mutual fund seems appropriate for your inves...

Q: What is the net asset value (NAV) for a mutual

What is the net asset value (NAV) for a mutual fund that has assets totaling $730 million, liabilities totaling $10 million, and 24 million shares outstanding?

Q: In the table below, indicate the typical charges for each type

In the table below, indicate the typical charges for each type of mutual fund fee and when the fee is assessed. Fee…………………………………………………… Typical Charge Load fund…………………………………………. No load fund…………………………...

Q: George owns 1,000 shares of ABC common stock and 3

George owns 1,000 shares of ABC common stock and 3,000 shares of Brightstar mutual fund. George elects to participate in Brightstar’s dividend reinvestment plan, reinvesting his annual dividends and c...

Q: At the time of Robert Granger’s death, his estate consisted of

At the time of Robert Granger’s death, his estate consisted of the following assets and liabilities measured at fair market value: Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Ozark Sports sells hunting and fishing equipment and provides guided hunting and

Ozark Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Ozark is owned and operated by Eric Griffith, a well-known sports enthusiast and hunter. Eric’s wife, Li...

Q: A sector fund specializing in commercial bank stocks had average daily assets

A sector fund specializing in commercial bank stocks had average daily assets of $3.4 billion during the year. This fund sold $1.25 billion worth of stock during the year, and its turnover ratio was 0...

Q: You purchased 2,000 shares in the New Pacific Growth Fund

You purchased 2,000 shares in the New Pacific Growth Fund on January 2, 2016, at an offering price of $47.10 per share. The front-end load for this fund is 5 percent, and the back-end load for redempt...

Q: You have been assigned to implement a three-month hedge for

You have been assigned to implement a three-month hedge for a stock mutual fund portfolio that primarily invests in medium-sized companies. The mutual fund has a beta of 1.15 measured relative to the...

Q: Is it true that the NAV of a money market mutual fund

Is it true that the NAV of a money market mutual fund never changes? How is this possible?

Q: An open-end mutual fund typically keeps a percentage, often

An open-end mutual fund typically keeps a percentage, often around 5 percent, of its assets in cash or liquid money market assets. How does this affect the fund’s return in a year in which the market...

Q: If you were concerned about the liquidity of mutual fund shares that

If you were concerned about the liquidity of mutual fund shares that you held, would you rather hold shares in a closed-end fund or an open-end fund? Why?

Q: A mutual fund that predominantly holds long-term Treasury bonds plans

A mutual fund that predominantly holds long-term Treasury bonds plans on liquidating the portfolio in three months. However, the fund manager is concerned that interest rates may rise from current lev...

Q: You invested $10,000 in a mutual fund at the

You invested $10,000 in a mutual fund at the beginning of the year when the NAV was $32.24. At the end of the year, the fund paid $0.24 in short-term distributions and $0.41 in long-term distributions...

Q: Suppose the mutual fund in Problem 1 has a current market price

Suppose the mutual fund in Problem 1 has a current market price quotation of $21.89. Is this a load fund? If so, calculate the front-end load. Data from Problem 1: The World Income Appreciation Fund...

Q: The Emerging Growth and Equity Fund is a “low-load

The Emerging Growth and Equity Fund is a “low-load” fund. The current offer price quotation for this mutual fund is $15.95, and the front-end load is 2.0 percent. What is the NAV? If there are 19.2 mi...

Q: The Aqua Liquid Assets Money Market Mutual Fund has a NAV of

The Aqua Liquid Assets Money Market Mutual Fund has a NAV of $1 per share. During the year, the assets held by this fund appreciated by 1.7 percent. If you had invested $25,000 in this fund at the sta...

Q: An open-end mutual fund has the following stocks:

An open-end mutual fund has the following stocks: If there are 50,000 shares of the mutual fund, what is the NAV?  

Q: Suppose the fund in Problem 5 has liabilities of $110,

Suppose the fund in Problem 5 has liabilities of $110,000. What is the NAV of the fund now? Data from Problem 5: An open-end mutual fund has the following stocks: If there are 50,000...

Q: A mutual fund sold $36 million of assets during the year

A mutual fund sold $36 million of assets during the year and purchased $32 million in assets. If the average daily assets of the fund were $96 million, what was the fund turnover?  

Q: In Problem 11, suppose the annual operating expense ratio for the

In Problem 11, suppose the annual operating expense ratio for the mutual fund is 0.75 percent and the management fee is 0.45 percent. How much money did the fund’s management earn during the year? If...

Q: Suppose you just inherited $25,000 from your Aunt Louise

Suppose you just inherited $25,000 from your Aunt Louise. You have decided to invest in an S&P Index fund, but you haven’t decided yet whether to use an ETF or a mutual fund. Suppose the ETF has an an...

Q: You are going to invest in a stock mutual fund with a

You are going to invest in a stock mutual fund with a 6 percent front-end load and a 1.75 percent expense ratio. You also can invest in a money market mutual fund with a 3.30 percent return and an exp...

Q: Suppose you purchase 5,000 shares of a closed-end

Suppose you purchase 5,000 shares of a closed-end mutual fund at its initial public offering; the offer price is $10 per share. The offering prospectus discloses that the fund promoter gets an 8 perce...

Q: Should we have bet the kids’ college fund at the dog track

Should we have bet the kids’ college fund at the dog track? Let’s look at one specific case of a college professor (let’s call him Prof. ME) with two young children. Two years ago, Prof. ME invested $...

Q: Jack asked Jill to marry him, and she has accepted under

Jack asked Jill to marry him, and she has accepted under one condition: Jack must buy her a new $330,000 Rolls-Royce Phantom. Jack currently has $45,530 that he may invest. He has found a mutual fund...

Q: Sarah Wiggum would like to make a single investment and have $

Sarah Wiggum would like to make a single investment and have $2 million at the time of her retirement in 35 years. She has found a mutual fund that will earn 4 percent annually. How much will Sarah ha...

Q: Assume that you are interested in earning some return on idle balances

Assume that you are interested in earning some return on idle balances you usually keep in your checking account and decide to buy some money market mutual fund shares by writing a check. Comment on t...

Q: Each year financial periodicals like the Wall Street Journal and Money Magazine

Each year financial periodicals like the Wall Street Journal and Money Magazine publish a list of the top performing mutual fund managers. And every year there are some fund managers who earn much hig...

Q: Contrast mutual fund ownership with direct investment in stocks and bonds.

Contrast mutual fund ownership with direct investment in stocks and bonds. Assume your class is going to debate the merits of investing through mutual funds versus investing directly in stocks and bon...

Q: In the absence of any load charges, open-end mutual

In the absence of any load charges, open-end mutual funds are priced at (or very close to) their net asset values, whereas closed-end funds rarely trade at their NAVs. Explain why one type of fund wou...

Q: What role, if any, will short-term investments play

What role, if any, will short-term investments play in your portfolio? Why? Complete the following table for the short-term investments listed. Find their current yields online, and explain which, if...

Q: You are presented with the following data: /

You are presented with the following data: Calculate the MFCR for each week. Based on the result, are you bullish or bearish?

Q: A year ago, an investor bought 200 shares of a mutual

A year ago, an investor bought 200 shares of a mutual fund at $8.50 per share. Over the past year, the fund has paid dividends of $0.90 per share and had a capital gains distribution of $0.75 per shar...

Q: The All-State Mutual Fund has the following five-year

The All-State Mutual Fund has the following five-year record of performance: Find this no-load fund’s five-year (2012–2016) average annual compound rate of return...

Q: Using the data in the following table, assume you are using

Using the data in the following table, assume you are using a constant-dollar plan with a rebalancing trigger of $1,500. The stock price represents your speculative portfolio, and the MM mutual fund r...

Q: Walt Davies and Shane O’Brien are district managers for Lee, Inc

Walt Davies and Shane O’Brien are district managers for Lee, Inc. Over the years, as they moved through the firm’s sales organization, they became (and still remain) close friends. Walt, who is 33 yea...

Q: What is a mutual fund? Discuss the mutual fund concept,

What is a mutual fund? Discuss the mutual fund concept, including the importance of diversification and professional management.

Q: Several months ago, Deb Forrester received a substantial sum of money

Several months ago, Deb Forrester received a substantial sum of money from the estate of her late aunt. Deb initially placed the money in a savings account because she was not sure what to do with it....

Q: Identify three potential sources of return to mutual fund investors and briefly

Identify three potential sources of return to mutual fund investors and briefly discuss how each could affect total return to shareholders. Explain how the discount or premium of a closed-end fund can...

Q: Discuss the various types of risk to which mutual fund shareholders are

Discuss the various types of risk to which mutual fund shareholders are exposed. What is the major risk exposure of mutual funds? Are all funds subject to the same level of risk? Explain.

Q: What are the advantages and disadvantages of mutual fund ownership?

What are the advantages and disadvantages of mutual fund ownership?

Q: Briefly describe how a mutual fund is organized. Who are the

Briefly describe how a mutual fund is organized. Who are the key players in a typical mutual fund organization?

Q: The Reverend Mark Thomas is the minister of a church in the

The Reverend Mark Thomas is the minister of a church in the San Diego area. He is married, has one young child, and earns a “modest income.” Because religious organizations are not notorious for their...

Q: Calvin Jacobs is a widower who recently retired after a long career

Calvin Jacobs is a widower who recently retired after a long career with a major Midwestern manufacturer. Beginning as a skilled craftsman, he worked his way up to the level of shop supervisor over a...

Q: Distinguish between the types of dividend distributions that mutual funds make.

Distinguish between the types of dividend distributions that mutual funds make. Are these dividends the only source of return for a mutual fund investor? Explain.

Q: Mary and Nick Stalcheck have an investment portfolio containing four investments.

Mary and Nick Stalcheck have an investment portfolio containing four investments. It was developed to provide them with a balance between current income and capital appreciation. Rather than acquire m...

Q: Refer to Problem 12.9. If there were a 3

Refer to Problem 12.9. If there were a 3% load on this fund, assuming you purchased the same number of shares, what would your rate of return be? Problem 12.9: Three years ago, you invested in the F...

Q: You invested in the no-load Oh Yes Mutual Fund one

You invested in the no-load Oh Yes Mutual Fund one year ago by purchasing 1,000 shares of the fund at the net asset value of $25.00 per share. The fund distributed dividends of $1.50 and capital gains...

Q: Refer to Problem 12.11. If Oh Yes was a

Refer to Problem 12.11. If Oh Yes was a load fund with a 2% front-end load, what would be the HPR? Problem 12.11: You invested in the no-load Oh Yes Mutual Fund one year ago by purchasing 1,000 shar...

Q: Three years ago, you invested in the Future Investco Mutual Fund

Three years ago, you invested in the Future Investco Mutual Fund by purchasing 1,000 shares of the fund at a net asset value of $20.00 per share. Because you did not need the income, you elected to re...

Q: Referring to Problem 13.18, assume you are using a

Referring to Problem 13.18, assume you are using a constant-ratio plan with a rebalance trigger of speculative-to-conservative of 1.25. What action, if any, should you take in time period 2? Be specif...

Q: A mutual fund plans to purchase $500,000 of 30

A mutual fund plans to purchase $500,000 of 30-year Treasury bonds in four months. These bonds have a duration of 12 years and are priced at 96-08 (32nds). The mutual fund is concerned about interest...

Q: Characterize the risk exposure(s) of the following FI transactions

Characterize the risk exposure(s) of the following FI transactions by choosing one or more of the following: a. Credit risk b. Interest rate risk c. Off-balance-sheet risk d. Foreign exchange rate ris...

Q: The sales literature of a mutual fund claims that the fund has

The sales literature of a mutual fund claims that the fund has no risk exposure since it invests exclusively in default risk free federal government securities. Is this claim true? Why or why not?

Q: A mutual fund plans to purchase $10 million of 20-

A mutual fund plans to purchase $10 million of 20-year T-bonds in two months. The bonds are yielding 7.68 percent. These bonds have a duration of 11 years. The mutual fund is concerned about interest...

Q: In each of the following cases, identify what risk the manager

In each of the following cases, identify what risk the manager of an FI faces and whether the risk should be hedged by buying a put or a call option. a. A commercial bank plans to issue CDs in three m...

Q: What is the difference between an open-end mutual fund and

What is the difference between an open-end mutual fund and an ETF closed-end fund? What is the difference between an open-end mutual fund and a unit investment trust?

Q: How is the net asset value (NAV) of a mutual

How is the net asset value (NAV) of a mutual fund determined? What is meant by the term marked-to-market daily?

Q: Who are the primary regulators of the mutual fund industry? How

Who are the primary regulators of the mutual fund industry? How do their regulatory goals differ from those of other types of financial institutions?

Q: What is the difference between an open-end mutual fund and

What is the difference between an open-end mutual fund and a closed-end fund? What is the difference between an open end mutual fund and a unit investment trust?

Q: An investor purchases a mutual fund for $50. The fund

An investor purchases a mutual fund for $50. The fund pays dividends of $1.50, distributes a capital gain of $2, and charges a fee of $2 when the fund is sold one year later for $52.50. What is the ne...

Q: A mutual fund has 300 shares of General Electric, currently trading

A mutual fund has 300 shares of General Electric, currently trading at $30, and 400 shares of Microsoft, Inc., currently trading at $54. The fund has 1,000 shares outstanding. a. What is the NAV of th...

Q: Suppose today a mutual fund contains 2,000 shares of J

Suppose today a mutual fund contains 2,000 shares of J.P. Morgan Chase, currently trading at $64.75, 1,000 shares of Walmart, currently trading at $63.10, and 2,500 shares of Pfizer, currently trading...

Q: An investor purchases a mutual fund share for $100. The

An investor purchases a mutual fund share for $100. The fund pays dividends of $3, distributes a capital gain of $4, and charges a fee of $2 when the fund is sold one year later for $105. What is the...

Q: A money market mutual fund bought $1,000,000

A money market mutual fund bought $1,000,000 of two year Treasury notes six months ago. During this time, the value of the securities has increased, but for tax reasons the mutual fund wants to postpo...

Q: Suppose an individual invests $20,000 in a load mutual

Suppose an individual invests $20,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 2.5 percent of the amount invested and is deducted from the original fu...

Q: Suppose an individual invests $10,000 in a load mutual

Suppose an individual invests $10,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 4 percent of the amount invested and is deducted from the original fund...

Q: In each of the following cases, indicate whether it would be

In each of the following cases, indicate whether it would be appropriate for an FI to buy or sell a forward contract to hedge the appropriate risk. a. A commercial bank plans to issue CDs in three mon...

Q: An investor buys 100 shares in a mutual fund on January 1

An investor buys 100 shares in a mutual fund on January 1, 2018, for $50 each. The fund earns dividends of $2 and $3 per share during 2018 and 2019. These are reinvested in the fund. The fund’s realiz...

Q: During 1 year, a particular mutual fund has outperformed the

During 1 year, a particular mutual fund has outperformed the S&P 500 index 33 out of 52 weeks. Find the probability that this performance or better would happen again

Q: Presented below are a number of independent situations. Instructions

Presented below are a number of independent situations. Instructions For each individual situation, determine the amount that should be reported as cash. If the item(s) is not reported as cash, exp...

Q: You have $12,000 in cash. You can deposit

You have $12,000 in cash. You can deposit it today in a mutual fund earning 8.2 percent compounded semiannually, or you can wait, enjoy some of it, and invest $11,000 in your brother’s business in two...

Q: Kate Eden received a graduation present of $2,000 that

Kate Eden received a graduation present of $2,000 that she is planning on investing in a mutual fund that earns 8.5 percent each year. How much money will she have in three years?

Q: Jeremy Denham plans to save $5,000 every year for

Jeremy Denham plans to save $5,000 every year for the next eight years, starting today. At the end of eight years, Jeremy will turn 30 years old and plans to use his savings toward the down payment on...

Q: Gary Kornig is 30 years old and wants to retire when he

Gary Kornig is 30 years old and wants to retire when he is 65. So far he has saved (1) $6,950 in an IRA account in which his money is earning 8.3 percent annually and (2) $5,000 in a money market acco...

Q: Babu Baradwaj is saving for his son’s college tuition. His son

Babu Baradwaj is saving for his son’s college tuition. His son is currently 11 years old and will begin college in seven years. Babu has an index fund investment of $7,500 that is earning 9.5 percent...

Q: Chuck Tomkovick is planning to invest $25,000 today in

Chuck Tomkovick is planning to invest $25,000 today in a mutual fund that will provide a return of 8 percent each year. What will be the value of the investment in 10 years?

Q: You invest $150 in a mutual fund today that pays 9

You invest $150 in a mutual fund today that pays 9 percent interest annually. How long will it take to double your money?

Q: Martha and Lew are married taxpayers with $400 of foreign tax

Martha and Lew are married taxpayers with $400 of foreign tax withholding from dividends in a mutual fund. They have enough foreign income from the mutual fund to claim the full $400 as a foreign tax...

Q: Define the following: (a) Time deposit (

Define the following: (a) Time deposit (b) Money market mutual fund (c) Money market deposit account (d) Fractional reserve banking (e) Reserves

Q: Victor and Maria Hernandez Victor and Maria, both in their

Victor and Maria Hernandez Victor and Maria, both in their late 30s, have two children: John, age 13, and Joseph, age 15. Victor has had a long sales career with a retail appliance store. Maria works...

Q: Distinguish between a money market account and a money market mutual fund

Distinguish between a money market account and a money market mutual fund account.

Q: Review the financial statements of Victor and Maria Hernandez (Table 3

Review the financial statements of Victor and Maria Hernandez (Table 3-2 and Table 3-3) and the financial ratios on page 87 and respond to the following questions: (a) How would you interpret their i...

Q: Distinguish between a managed mutual fund and an unmanaged mutual fund.

Distinguish between a managed mutual fund and an unmanaged mutual fund.

Q: Explain why it is important to review your investment philosophy and goals

Explain why it is important to review your investment philosophy and goals when selecting mutual fund investments.

Q: How might you go about monitoring your mutual fund investments?

How might you go about monitoring your mutual fund investments?

Q: After learning about mutual funds, the Johnsons are confident that they

After learning about mutual funds, the Johnsons are confident that they are a great way to invest, especially because of the diversification and professional management that funds offer. The couple ha...

Q: Xiao and Shiao Jing-jian, newlyweds from Laramie, Wyoming

Xiao and Shiao Jing-jian, newlyweds from Laramie, Wyoming, have decided to begin investing for the future. Xiao is a 7-Eleven store manager, and Shiao is a high-school math teacher. The couple intends...

Q: A year ago, George Jetson, from Orbit City, Texas

A year ago, George Jetson, from Orbit City, Texas, invested $1,000 by buying 100 shares of the Can’t Lose Mutual Fund, an aggressive growth no-load mutual fund. George reinvested his dividends, so he...

Q: Janet Brooks, of Amarillo, Texas, plans to invest $

Janet Brooks, of Amarillo, Texas, plans to invest $3,000 each year in a mutual fund for the next 40 years to accumulate savings for retirement. Her twin sister, Rebecca, plans to invest the same amoun...

Q: Mutual funds that specialize in the stock of natural resources companies showed

Mutual funds that specialize in the stock of natural resources companies showed considerable variation in their performance during the 12-month period ending July 2010. Consider the Rate of Return col...

Q: Consider the assets of stock mutual funds, as shown in Table

Consider the assets of stock mutual funds, as shown in Table 5.5.3. Answer the parts of the previous problem using the column of assets instead of the rates of return. Table 5.5.3:

Q: The performance claimed by mutual funds is often considerably better than what

The performance claimed by mutual funds is often considerably better than what you would experience if you actually put your money on the line. Table 5.5.11 shows the annual return for internationally...

Q: Briefly describe the steps in the mutual fund selection process.

Briefly describe the steps in the mutual fund selection process.

Q: Identify three potential sources of return to mutual fund investors, and

Identify three potential sources of return to mutual fund investors, and briefly discuss how each could affect total return to shareholders.

Q: Who are the key players in a typical mutual fund organization?

Who are the key players in a typical mutual fund organization?

Q: Russ Alonzo is 42 years old, single, and works as

Russ Alonzo is 42 years old, single, and works as a designer for a major architectural firm. He is well paid and over time has built up a sizable portfolio of investments. He considers himself an aggr...

Q: What’s the difference between an open-end mutual fund and an

What’s the difference between an open-end mutual fund and an ETF?

Q: Briefly describe a back-end load, a low load,

Briefly describe a back-end load, a low load, and a hidden load. How can you tell what kind of fees and charges a mutual fund has?

Q: How do variable annuity returns generally compare to mutual fund returns?

How do variable annuity returns generally compare to mutual fund returns? Can you explain why there would be any difference in returns?

Q: Damon Bellamy has worked in the management services division of Niche Consultants

Damon Bellamy has worked in the management services division of Niche Consultants for the past five years. He currently earns an annual salary of about $120,000. At 33, he’s still a bachelor and has a...

Q: Nichole Whiting is the director of a major charitable organization in Charlotte

Nichole Whiting is the director of a major charitable organization in Charlotte, North Carolina. A single mother of one young child, she earns what could best be described as a modest income. Because...

Q: Jessica Wright has always been interested in stocks. She has decided

Jessica Wright has always been interested in stocks. She has decided to invest $2,000 once every year into an equity mutual fund that is expected to produce a return of 6 percent a year for the forese...

Q: Use Worksheet 11.2 to help Clayton and Julie Grover,

Use Worksheet 11.2 to help Clayton and Julie Grover, a married couple in their early 40s, evaluate their securities portfolio, which includes these holdings. a. IBM. (NYSE; symbol IBM): 100 shares bou...

Q: Using the mutual fund quotes in Exhibit 13.4, and

Using the mutual fund quotes in Exhibit 13.4, and assuming that you can buy these funds at their quoted NAVs, how much would you have to pay to buy each of the following funds? a. American Century Em...

Q: Contrast mutual fund ownership with direct investment in stocks and bonds.

Contrast mutual fund ownership with direct investment in stocks and bonds. Assume that your class is going to debate the merits of investing through mutual funds versus investing directly in stocks an...

Q: Imagine that you’ve just inherited $40,000 from a rich

Imagine that you’ve just inherited $40,000 from a rich uncle. Now you’re faced with the problem of deciding how to spend it. You could make a down payment on a condo—or better yet, on that BMW that yo...

Q: In 2016, Mr. Dale paid $47,600 for

In 2016, Mr. Dale paid $47,600 for 3,400 shares of GKL Mutual Fund and elected to reinvest his year-end dividends in additional shares. In 2016 and 2017, he received Form 1099s reporting the following...

Q: Mr. Alm earned a $61,850 salary and recognized

Mr. Alm earned a $61,850 salary and recognized a $5,600 capital loss on the sale of corporate stock this year. Compute Mr. Alm’s AGI and any capital loss carry forward into future years in each of the...

Q: LN Consulting is a calendar year, cash basis unincorporated business.

LN Consulting is a calendar year, cash basis unincorporated business. The business is not required to provide audited financial statements to any external user. LN’s accounting recor...

Q: Do the project assigned below, following the step‐by‐

Do the project assigned below, following the step‐by‐step process outlined: Compile a bibliography on any one of the following topics, or any other topic of interest to you, from a business perspectiv...

Q: You have been at your job with S&S Air for

You have been at your job with S&S Air for a week now and have decided you need to sign up for the company’s 401(k) plan. Even after your discussion with Audrey Sanborn, the Bledsoe Financial Services...

Q: Suppose you are still committed to owning a $245,000 Ferrari

Suppose you are still committed to owning a $245,000 Ferrari (see Problem 9). If you believe your mutual fund can achieve an annual rate of return of 11.2 percent and you want to buy the car in 9 year...

Q: "You recently graduated from college, and your job search led

"You recently graduated from college, and your job search led you to S&S Air. Because you felt the company’s business was taking off, you accepted a job offer. The first day on t...

Q: Suppose you are still committed to owning a $245,000 Ferrari

Suppose you are still committed to owning a $245,000 Ferrari (see Problem 9). If you believe your mutual fund can achieve an annual rate of return of 11.2 percent and you want to buy the car in 9 year...

Q: "You recently graduated from college, and your job search led

"You recently graduated from college, and your job search led you to S&S Air. Because you felt the company’s business was taking off, you accepted a job offer. The first day on t...

Q: Blake and Valerie Meyer (both age 30) are married with

Blake and Valerie Meyer (both age 30) are married with one dependent child (age 5). On the basis of the following information, compute the Meyers’ 2018 federal income tax (including any AMT) on their...

Q: Mrs. Carr made the following interest payments. Determine the extent

Mrs. Carr made the following interest payments. Determine the extent to which she can deduct each payment on her Form 1040. a. $21,000 on a $280,000 mortgage incurred to construct (and secured by) her...

Q: How do an open-end and a closed-end mutual

How do an open-end and a closed-end mutual fund differ?

Q: A client purchased a mutual fund with a $10,000

A client purchased a mutual fund with a $10,000 lump-sum amount four years ago. During the four years, $4,000 of dividends were reinvested. Today the shares are valued at $20,000 (including any shares...

Q: Given the following diversified mutual fund performance data, which fund had

Given the following diversified mutual fund performance data, which fund had the best risk-adjusted performance if the risk-free rate of return is 5.7 percent? a. Fund B because the annual return is...

Q: How has mutual fund performance compared with overall indexes? Why do

How has mutual fund performance compared with overall indexes? Why do you think that is the case?

Q: You receive a phone call from someone you have not spoken to

You receive a phone call from someone you have not spoken to recently. The caller is excited, having just heard that a brand new mutual fund is positioned to deliver large gains in the coming year. Th...

Q: When it came to investments, Richard and Monica could agree on

When it came to investments, Richard and Monica could agree on only one thing—that they would have a tough time reaching a decision on asset allocations and individual investments. Previously, Monica...

Q: When would a mutual fund be more attractive than an annuity?

When would a mutual fund be more attractive than an annuity?

Q: During 2018, your clients, Mr. and Mrs. Howell

During 2018, your clients, Mr. and Mrs. Howell, owned the following investment assets: Investment Assets Date Acquired Purchase Price Broker’s Commission Paid at Time of Purchase  300 shares of...

Q: On the advice of a friend, Gilda invests $ 20,

On the advice of a friend, Gilda invests $ 20,000 in a mutual fund that has earned 10 percent per year, on average, in recent years. If this rate of return continues, determine how much her investment...

Q: Suppose that a small country currently has $4 million of currency

Suppose that a small country currently has $4 million of currency in circulation, $6 million of checkable deposits, $200 million of savings deposits, $40 million of small denominated time deposits, an...

Q: Which two of the following financial institutions offer checkable deposits included within

Which two of the following financial institutions offer checkable deposits included within the M1 money supply: mutual fund companies; insurance companies; commercial banks; securities firms; thrift i...

Q: Mammouth Mutual Fund of New York has $5 million to invest

Mammouth Mutual Fund of New York has $5 million to invest in certificates of deposit (CDs) for the next six months (180 days). It can buy either a Philadelphia National Bank (PNB) CD with an annual yi...

Q: Classify the following as a transaction reported in a sub-component

Classify the following as a transaction reported in a sub-component of the current account or the capital and financial accounts of the two countries involved: a. A U.S. food chain imports wine from C...

Q: You are considering the risk-return profile of two mutual funds

You are considering the risk-return profile of two mutual funds for investment. The relatively risky fund promises an expected return of 8% with a standard deviation of 14%. The relatively less risky...

Q: Five years after graduating from college, Lucia Li feels that she

Five years after graduating from college, Lucia Li feels that she is finally ready to invest some of her earnings. She has eliminated her credit card debt and has established an emergency fund. Her pa...

Q: A financial analyst creates the following probability distribution for the performance of

A financial analyst creates the following probability distribution for the performance of an equity income mutual fund. a. Comment on the optimism or pessimism depicted in the analystâ€&#...

Q: Consider the return data (in percent) for the Value mutual

Consider the return data (in percent) for the Value mutual fund in Table 3.1. Table 3.1: a. Calculate and interpret the 25th, 50th, and 75th percentiles. b. Calculate the interquartile range. Ar...

Q: The following table shows the annual returns (in percent) for

The following table shows the annual returns (in percent) for Fidelity’s Select Electronic and Select Utilities mutual funds for the years 2001 through 2009. Source: www.finance.ya...

Q: The following table presents a portion of the annual returns for Fidelity’s

The following table presents a portion of the annual returns for Fidelity’s Select Automotive Fund (in percent). This mutual fund invests primarily in companies engaged in the manufacturing, the marke...

Q: The India Fund, Inc. (IFN) is a close

The India Fund, Inc. (IFN) is a close-ended equity mutual fund launched by the Blackstone Group’s Asset Management arm. Although it promises impressive returns, it does so at the cos...

Q: The economies of the world tend to rise and fall in cycles

The economies of the world tend to rise and fall in cycles that offset each other. International stocks can provide possible diversification for a portfolio heavy on U.S. equities. Because research on...

Q: Skylar and Walter Black have been married for 25 years. They

Skylar and Walter Black have been married for 25 years. They live at 883 Scrub Brush Street, Apt. 52B, Las Vegas, NV 89125. Skylar is a homemaker and Walt is a high school teacher. Skylar’s So...

Q: Montreal Brokers, a small brokerage firm and PEI tronics, a

Montreal Brokers, a small brokerage firm and PEI tronics, a software development company, are both separately considering developing and marketing a new software package. Neither party is aware that t...

Q: A financial analyst would like to determine whether the return on Fidelity’s

A financial analyst would like to determine whether the return on Fidelity’s Magellan mutual fund varies depending on the quarter; that is, if there is a seasonal component describin...

Q: The following table lists a portion of the data representing the annual

The following table lists a portion of the data representing the annual returns (in percent) over a 10-year period for the Balanced mutual fund, a top-performing mutual fund from the Janus Capital Gro...

Q: The table below shows a portion of the returns for Fidelity’s Equity

The table below shows a portion of the returns for Fidelity’s Equity Income mutual fund and Vanguard’s Equity Income mutual fund from 2000 through 2010. a. Specif...

Q: The Optima Mutual Fund has an expected return of 20%, and

The Optima Mutual Fund has an expected return of 20%, and a volatility of 20%. Optima claims that no other portfolio offers a higher Sharpe ratio. Suppose this claim is true, and the risk-free interes...

Q: Allison and Bill are both mutual fund managers, although Allison is

Allison and Bill are both mutual fund managers, although Allison is more skilled than Bill. Both have $100 million in assets under management and charge a fee of 1%/year. Allison is able to generate a...

Q: How do mutual fund return data present evidence for or against efficient

How do mutual fund return data present evidence for or against efficient markets? Explain.

Q: The Investment Company Act prohibits a mutual fund from engaging in certain

The Investment Company Act prohibits a mutual fund from engaging in certain transactions when there may be a conflict of interest between the manager of the fund and its shareholders. Under rules issu...

Q: A financial analyst has determined that there is a 22% probability

A financial analyst has determined that there is a 22% probability that a mutual fund will outperform the market over a 1-year period provided that it outperformed the market the previous year. If onl...

Q: A financial analyst estimates that the probability that the economy will experience

A financial analyst estimates that the probability that the economy will experience a recession in the next 12 months is 25%. She also believes that if the economy encounters a recession, the probabil...

Q: The annual rate of return on a mutual fund is normally distributed

The annual rate of return on a mutual fund is normally distributed with a mean of 14% and a standard deviation of 18%. a. What is the probability that the fund returns more than 25% next year? b. What...

Q: In January 2018, Ezra purchased 2,000 shares of Gold

In January 2018, Ezra purchased 2,000 shares of Gold Utility Mutual Fund for $20,000. In June, Ezra received an additional 100 shares as a dividend, in lieu of receiving $1,000 in cash dividends. In D...

Q: The specific identification method is important when one invests in mutual funds

The specific identification method is important when one invests in mutual funds. When taxpayers sell part of their holdings, the basis of the surrendered shares can be difficult to compute. Go to the...

Q: Several years ago, Prudential Securities was charged with fraud for late

Several years ago, Prudential Securities was charged with fraud for late trading. This was the first major brokerage house to be charged with the illegal practice of buying mutual funds after hours. T...

Q: Mutual funds minimize risks by diversifying the investments they make. There

Mutual funds minimize risks by diversifying the investments they make. There are mutual funds that specialize in particular types of investments. For example, the TD Precious Metal Mutual Fund buys sh...

Q: There are thousands of mutual funds available (see page 161 for

There are thousands of mutual funds available (see page 161 for a brief introduction to mutual funds). There is no shortage of sources of information about them. Newspapers regularly report the value...

Q: If the total market value of an open-end mutual fund

If the total market value of an open-end mutual fund is $2,500 and there are 100 shares outstanding at the end of trading on Monday, what would the NAV of the fund be?

Q: Bob is confused about how the pricing of the open-end

Bob is confused about how the pricing of the open-end mutual fund he owns is actually calculated. Bob sees that stock prices have increased, yet the market value of his mutual fund, as determined by t...

Q: Jason is thinking about purchasing some mutual fund shares, but he

Jason is thinking about purchasing some mutual fund shares, but he is confused by the terminology. How would you explain to Jason the difference between a mutual fund with loads and a no-load mutual f...

Q: Doug sees that his mutual fund is charging him with a 12b

Doug sees that his mutual fund is charging him with a 12b-1 fee. He has no idea what this is. Which of the following would correctly summarize for Doug what he is being charged?

Q: As the nature of investing shifted in the 1990s (more day

As the nature of investing shifted in the 1990s (more day traders and faster f low of information using technology), the relationship between mutual fund monthly performance (Return) in percent and mo...

Q: According to the Normal model N(0.062, 0

According to the Normal model N(0.062, 0.018) describing mutual fund returns in the 1st quarter of 2013 in Exercise 23, what percent of this group of funds would you expect to have return a) over 6.8...

Q: A young entrepreneur has just raised $30,000 from investors

A young entrepreneur has just raised $30,000 from investors, and she would like to invest it while she continues her fund-raising in hopes of starting her company one year from now. She wants to do du...

Q: According to the U.S. Securities and Exchange Commission (

According to the U.S. Securities and Exchange Commission (SEC), a mutual fund is a professionally managed collection of investments for a group of investors in stocks, bonds, and other securities. The...

Q: For each description of data in Exercises 7 to 26, identify

For each description of data in Exercises 7 to 26, identify the W’s, name the variables, specify for each variable whether its use indicates it should be treated as categorical or quantitative, and fo...

Q: Here is an ogive of the distribution of monthly returns for a

Here is an ogive of the distribution of monthly returns for a group of aggressive (or high growth) mutual funds over a period of 25 years. (Recall from Exercise 53 that an ogive, or cumulative relativ...

Q: An investor is considering how to invest her money. She has

An investor is considering how to invest her money. She has two options—either a domestic mutual fund that only invests in blue chip stocks or an international aggressive mutual fund...

Q: Index funds are mutual funds that try to mimic the movement of

Index funds are mutual funds that try to mimic the movement of leading indexes, such as the S&P 500 or the Russell 2000. The beta values (as described in Problem 13.49) for these funds are therefo...

Q: When a mutual fund company charges a fee of 0.47

When a mutual fund company charges a fee of 0.47% on its index funds, its assets in the fund are $41 billion. And when it charges a fee of 0.18%, its assets in the fund are $300 billion. (Source: The...

Q: Index-Fund Fees Suppose that the cost function in Exercise 45

Index-Fund Fees Suppose that the cost function in Exercise 45 is C(x) = -2.5x + 1, where x% is the index-fund fee. (The company has a fixed cost of $1 billion, and the cost decreases as a function of...

Q: Maria and Tracey became good friends while working at the same entity

Maria and Tracey became good friends while working at the same entity. Two years ago, they both decided to increase their savings so that they could eventually purchase homes. Each began by putting a...

Q: Information about mutual funds provided by Morningstar includes the type of mutual

Information about mutual funds provided by Morningstar includes the type of mutual fund (Domestic Equity, International Equity, or Fixed Income) and the Morningstar rating for the fund. The rating is...

Q: The Wall Street Journal provides the net asset value, the year

The Wall Street Journal provides the net asset value, the year-to-date percent return, and the three-year percent return for 882 mutual funds at the end of 2017. Assume that a simple random sample of...

Q: Suppose that at the beginning of Year 1 you invested $10

Suppose that at the beginning of Year 1 you invested $10,000 in the Stivers mutual fund and $5000 in the Trippi mutual fund. The value of each investment at the end of each subsequent year is provided...

Q: Investors commonly use the standard deviation of the monthly percentage return for

Investors commonly use the standard deviation of the monthly percentage return for a mutual fund as a measure of the risk for the fund; in such cases, a fund that has a larger standard deviation is co...

Q: An investor wants to select one of seven mutual funds for the

An investor wants to select one of seven mutual funds for the coming year. Data showing the percentage annual return for each fund during five typical one-year periods are shown here. The assumption i...

Q: Blake and Valerie Meyer (both age 30) are married with

Blake and Valerie Meyer (both age 30) are married with one dependent child (age 5). On the basis of the following information, compute the Meyers’ 2019 federal income tax (including any AMT) on their...

Q: Suppose you are still committed to owning a $275,000

Suppose you are still committed to owning a $275,000 Ferrari (see Problem 9). If you believe your mutual fund can achieve an annual rate of return of 11.2 percent and you want to buy the car in 9 year...

Q: During 2019 Roberto sold 830 shares of Casual Investor Mutual Fund for

During 2019 Roberto sold 830 shares of Casual Investor Mutual Fund for $8.875 per share. The shares were purchased on the following dates: Calculate the gain (loss) on the sale under the following as...

Q: The Wall Street Journal provides the net asset value, the year

The Wall Street Journal provides the net asset value, the year-to-date percent return, and the three-year percent return for 882 mutual funds at the end of 2017. Assume that a simple random sample of...

Q: Suppose that at the beginning of Year 1 you invested $10

Suppose that at the beginning of Year 1 you invested $10,000 in the Stivers mutual fund and $5000 in the Trippi mutual fund. The value of each investment at the end of each subsequent year is provided...

Q: Information about mutual funds provided by Morningstar includes the type of mutual

Information about mutual funds provided by Morningstar includes the type of mutual fund ( Domestic Equity, International Equity, or Fixed Income) and the Morningstar rating for the fund. The rating is...

Q: In January 2021, Ezra purchased 2,000 shares of Gold

In January 2021, Ezra purchased 2,000 shares of Gold Utility Mutual Fund for $20,000. In June, Ezra received an additional 100 shares as a dividend, in lieu of receiving $1,000 in cash dividends. In D...

Q: Suppose you have some money to invest, for simplicity $1

Suppose you have some money to invest, for simplicity $1, and you are planning to put a fraction w into a stock market mutual fund and the rest, 1 - w, into a mutual fund. Suppose that $1 invested in...

Q: What problems would confront a mutual fund trying to create an index

What problems would confront a mutual fund trying to create an index fund tied to an equally weighted index of a broad stock market?

Q: Would you expect a typical open-end fixed-income mutual

Would you expect a typical open-end fixed-income mutual fund to have higher or lower operating expenses than a fixed-income unit investment trust? Why?

Q: You are considering an investment in a mutual fund with a 4

You are considering an investment in a mutual fund with a 4% load and an expense ratio of .5%. You can invest instead in a bank CD paying 6% interest. a. If you plan to invest for 2 years, what annual...

Q: Consider a mutual fund with $200 million in assets at the

Consider a mutual fund with $200 million in assets at the start of the year and 10 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the...

Q: a. A mutual fund with beta of .8 has an

a. A mutual fund with beta of .8 has an expected rate of return of 14%. If rf = 5%, and you expect the rate of return on the market portfolio to be 15%, should you invest in this fund? What is the fun...

Q: Martha and Lew are married taxpayers with $400 of foreign tax

Martha and Lew are married taxpayers with $400 of foreign tax withholding from dividends in a mutual fund. They have enough foreign income from the mutual fund to claim the full $400 as a foreign tax...

Q: Skylar and Walter Black have been married for 25 years. They

Skylar and Walter Black have been married for 25 years. They live at 883 Scrub Brush Street, Apt. 52B, Las Vegas, NV 89125. Skylar is a stay-at-home parent and Walt is a high school teacher. Skylar&ac...

Q: Rio National Corp. is a U.S.-based company

Rio National Corp. is a U.S.-based company and the largest competitor in its industry. Tables 18F through 18I present financial statements and related information for the company. Table 18J presents r...

Q: The Retired Fund is an open-ended mutual fund composed of

The Retired Fund is an open-ended mutual fund composed of $500 million in U.S. bonds and U.S. Treasury bills. This fund has had a portfolio duration (including T-bills) of between 3 and 9 years. Retir...

Q: Why is it harder to assess the performance of a hedge fund

Why is it harder to assess the performance of a hedge fund portfolio manager than that of a typical mutual fund manager?

Q: “The strong form of the efficient-market hypothesis is nonsense

“The strong form of the efficient-market hypothesis is nonsense. Look at mutual fund X; it has had superior performance for each of the last 10 years.” Does the speaker have a point? Suppose that ther...

Q: You are in your third year as internal auditor with VXI International

You are in your third year as internal auditor with VXI International, manufacturer of parts and supplies for jet aircraft. VXI began a defined contribution pension plan three years ago. The plan is a...

Q: Much is made of the fact that certain mutual funds outperform the

Much is made of the fact that certain mutual funds outperform the market year after year (that is, the return from holding shares in the mutual fund is higher than the return from holding a portfolio...

Q: During one 12-week period, a particular mutual fund outperformed

During one 12-week period, a particular mutual fund outperformed the S&P 500 index 37 out of 60 days. Find the probability that it would perform as well or better again.

Q: Suppose that Peter Cartman is deciding whether to invest in a bond

Suppose that Peter Cartman is deciding whether to invest in a bond mutual fund or a stock fund. Both bond and stock funds are sensitive to changing market conditions. His analysis reveals that when th...

Q: Over the last month, the Sampsons have been struggling with how

Over the last month, the Sampsons have been struggling with how to invest their savings to support their children’s college education. They previously considered stocks and bonds and are now seriously...

Q: The Sampsons have been evaluating methods for investing money that will ultimately

The Sampsons have been evaluating methods for investing money that will ultimately be used to support their children’s college education. They have concluded that a mutual fund is better suited to the...

Q: With your help, Dave and Sharon Sampson have now established a

With your help, Dave and Sharon Sampson have now established a financial plan. Among their key financial planning decisions were the following: • Budgeting. They decided to revise their budget to make...

Q: Tax Consequences. Ronnie owns 600 shares of a stock mutual fund

Tax Consequences. Ronnie owns 600 shares of a stock mutual fund. This year he received dividend distributions of sixty stock mutual fund shares ($40 per share) and long-term capital gain distributions...

Q: Consider a mutual fund with $200 million in assets at the

Consider a mutual fund with $200 million in assets at the start of the year and with 10 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end o...

Q: Would you expect a typical open-end fixed-income mutual

Would you expect a typical open-end fixed-income mutual fund to have higher or lower operating expenses than a fixed-income unit investment trust? Why?

Q: Which of the following observations would provide evidence against the semistrong form

Which of the following observations would provide evidence against the semistrong form of the efficient market theory? Explain. a. Mutual fund managers do not on average make superior returns. b. Yo...

Q: You are considering an investment in a mutual fund with a 4

You are considering an investment in a mutual fund with a 4% load and an expense ratio of 0.5%. You can invest instead in a bank CD paying 6% interest a. If you plan to invest for two years, what ann...

Q: What problems would confront a mutual fund trying to create an index

What problems would confront a mutual fund trying to create an index fund tied to an equally weighted index of a broad stock market?

Q: Rio National Corp. is a U.S.-based company

Rio National Corp. is a U.S.-based company and the largest competitor in its industry. Tables 13.5–13.8 present financial statements and related information for the company. Table 13...

Q: Why is it harder to assess the performance of a hedge fund

Why is it harder to assess the performance of a hedge fund portfolio manager than that of a typical mutual fund manager?

Q: Why is it harder to assess the performance of a hedge fund

Why is it harder to assess the performance of a hedge fund portfolio manager than that of a typical mutual fund manager?

Q: You are evaluating a closed-end mutual fund and see that

You are evaluating a closed-end mutual fund and see that its price is different from its net asset value (NAV). The fund has an expense ratio () of 2.8% and a dividend yield () of 4%. The fund has exp...

Q: The Retired Fund is an open-ended mutual fund composed of

The Retired Fund is an open-ended mutual fund composed of $500 million in U.S. bonds and U.S. Treasury bills. This fund has had a portfolio duration (including T-bills) of between three and nine years...

Q: What are the three most common objectives of opening a mutual fund

What are the three most common objectives of opening a mutual fund account? Why are they so popular and flexible?

Q: The Wellton Fund is a balanced mutual fund that includes a mix

The Wellton Fund is a balanced mutual fund that includes a mix of stocks and bonds. Following are the year-end share prices of the fund and Dow Jones Industrial Average (DJIA) for a 20-year period: De...

Q: The Victory Plus Mutual Fund of growth stocks has had the following

The Victory Plus Mutual Fund of growth stocks has had the following average monthly price for the past 10 months: Compute the exponentially smoothed forecast with a = .40, the adjusted exponential smo...

Q: Jamie Lee and Ross are ready to evaluate a mutual fund more

Jamie Lee and Ross are ready to evaluate a mutual fund more closely. Choose a mutual fund that has been mentioned in Chapter 13 or one that has been recommended by a friend or family member, and com...

Q: The Western Capital Growth mutual fund has Total assets: $

The Western Capital Growth mutual fund has Total assets: $836,000,000 Total liabilities: $6,000,000 Total number of shares: 40,000,000 What is the fund’s net asset value (NAV)? (LO13.1)

Q: Three years ago, James Matheson bought 200 shares of a mutual

Three years ago, James Matheson bought 200 shares of a mutual fund for $29 a share. During the three-year period, he received total income dividends of $1.90 per share. He also received total capita...

Q: Assume that one year ago, you bought 120 shares of a

Assume that one year ago, you bought 120 shares of a mutual fund for $31 a share, you received a $0.82 per-share capital gain distribution during the past 12 months, and the market value of the fund i...

Q: During one three-month period, Matt Roundtop’s mutual fund grew

During one three-month period, Matt Roundtop’s mutual fund grew by $4,000. If he withdraws 35 percent of the growth, how much will he receive? (LO13.4)

Q: Ted Riley owns a Lexus worth $40,000. He

Ted Riley owns a Lexus worth $40,000. He owns a home worth $275,000. He has a checking account with $800 in it and a savings account with $1,900 in it. He has a mutual fund worth $110,000. His persona...

Q: One of Philip Mahn’s investments is going to mature, and he

One of Philip Mahn’s investments is going to mature, and he wants to determine how to invest the proceeds of $30,000. Philip is considering two new investments: a stock mutualfund and a one-year certi...

Q: You are in your third year as internal auditor with VXI International

You are in your third year as internal auditor with VXI International, manufacturer of parts and supplies for jet aircraft. VXI began a defined contribution pension plan three years ago. The plan is a...

Q: The Upward Investment Company manages a mutual fund composed mostly of speculative

The Upward Investment Company manages a mutual fund composed mostly of speculative stocks. You recently saw an ad claiming that investments in the funds have been earning a rate of return of 21%. This...

Q: Carson Company is considering a private placement of bonds with Venus Mutual

Carson Company is considering a private placement of bonds with Venus Mutual Fund. a. Explain the interaction between Carson and Venus. How would Venus Mutual Fund serve Carson’s needs, and how would...

Q: An international mutual fund sponsored by a U.S. securities

An international mutual fund sponsored by a U.S. securities firm consists of bonds evenly allocated across the United States and the United Kingdom. One of the portfolio managers has decided to hedge...

Q: What is the function of a mutual fund? Why are mutual

What is the function of a mutual fund? Why are mutual funds popular among investors? How does a money market mutual fund differ from a stock or bond mutual fund?

Q: Consider the prevailing conditions that could affect the demand for stocks,

Consider the prevailing conditions that could affect the demand for stocks, including inflation, the economy, the budget deficit, and the Fed’s monetary policy, political conditions, and the general m...

Q: Support or refute the following statement: Investors can avoid all types

Support or refute the following statement: Investors can avoid all types of risk by purchasing a mutual fund that contains only Treasury bonds.

Q: Describe the ideal mutual fund for investors who wish to generate tax

Describe the ideal mutual fund for investors who wish to generate tax-free income but also maintain a low degree of interest rate risk.

Q: Explain how the income generated by a mutual fund is taxed when

Explain how the income generated by a mutual fund is taxed when it distributes at least 90 percent of its taxable income to shareholders.

Q: Morningstar, a firm that evaluates and rates mutual fund performance,

Morningstar, a firm that evaluates and rates mutual fund performance, published an article on its website discussing a company's book value per share (shareholders' equity/number of shares outstanding...

Q: The High-Growth mutual fund earned a return last year of

The High-Growth mutual fund earned a return last year of 11% and had a beta of 1.3. The Value Stock fund earned a return of 13% and had a beta of 1.5. The risk-free rate was 2%, and the market return...

Q: A year ago, an investor bought 100 shares of a mutual

A year ago, an investor bought 100 shares of a mutual fund at $7.50 per share. This year, the fund paid dividends of $0.75 per share capital gains of $0.50 per share. a. Find the investor’s holding pe...

Q: Refer to Problem 12.9. If there were a 2

Refer to Problem 12.9. If there were a 2.5% load on this fund, assuming you purchased the same number of shares, what would you rate of return be? Data from Problem 12.9: Five years ago, you invested...

Q: You invested in the no-load Best Mutual Fund one year

You invested in the no-load Best Mutual Fund one year ago by purchasing 1,000 shares of the fund at the net asset value of $20.00 per share. The fund distributed dividends of $1.00 and capital gains o...

Q: Refer to Problem 12.11. If Best was a load

Refer to Problem 12.11. If Best was a load fund with a 2.5% front-end load, what would be the HPR? Data from Problem 12.11: You invested in the no-load Best Mutual Fund one year ago by purchasing 1,0...

Q: The All-State Mutual Fund has the following five-year

The All-State Mutual Fund has the following five-year record of performance: Find this no-load fund’s five-year (2015–2019) average annual compound rate of return....

Q: Five years ago, you invested in the Future Investco Mutual Fund

Five years ago, you invested in the Future Investco Mutual Fund by purchasing 1,500 shares of the fund at a net asset value of $18.75 per share. Because you did not need the income, you elected to rei...

Q: Using the data in the following table, assume you are using

Using the data in the following table, assume you are using a constant-dollar plan with a rebalancing trigger of $1,500. The stock price represents your speculative portfolio, and the MM mutual fund r...

Q: Referring to Problem 13.18, assume you are using a

Referring to Problem 13.18, assume you are using a constant-ratio plan with a rebalance trigger of speculative-to-conservative of 1.25. What action, if any, should you take in time period 2? Be specif...

Q: Walt Davies and Shane O’Brien are district managers for Lee, Inc

Walt Davies and Shane O’Brien are district managers for Lee, Inc. Over time, as they moved through the firm’s sales organization, they became close friends. Walt, who is 33 years old, currently lives...

Q: Several months ago, Deb Forrester received a substantial sum of money

Several months ago, Deb Forrester received a substantial sum of money from the estate of her late aunt. Deb initially placed the money in a savings account because she was not sure what to do with it....

Q: Calvin Jacobs is a widower who recently retired after a long career

Calvin Jacobs is a widower who recently retired after a long career with a major Midwestern manufacturer. Beginning as a skilled craftsman, he worked his way up to the level of shop supervisor over 30...

Q: Mary and Nick Stalcheck have an investment portfolio containing four investments.

Mary and Nick Stalcheck have an investment portfolio containing four investments. It was developed to provide them with a balance between current income and capital appreciation. Rather than acquire m...

Q: What is a mutual fund? Discuss the mutual fund concept,

What is a mutual fund? Discuss the mutual fund concept, including the importance of diversification and professional management.

Q: Identify three potential sources of return to mutual fund investors, and

Identify three potential sources of return to mutual fund investors, and briefly discuss how each could affect total return to shareholders. Explain how the discount or premium of a closed-end fund ca...

Q: Discuss the types of risk that mutual fund shareholders face. What

Discuss the types of risk that mutual fund shareholders face. What is the major risk exposure of mutual funds? Are all funds subject to equal risk? Explain.

Q: What are the advantages and disadvantages of mutual fund ownership?

What are the advantages and disadvantages of mutual fund ownership?

Q: Briefly describe how a mutual fund is organized. Who are the

Briefly describe how a mutual fund is organized. Who are the key players in a typical mutual fund organization?

Q: Distinguish between the types of dividend distributions that mutual funds make.

Distinguish between the types of dividend distributions that mutual funds make. Are these dividends the only source of return for a mutual fund investor? Explain.

Q: Each year the financial media publishes lists of the top-performing

Each year the financial media publishes lists of the top-performing mutual fund managers. And every year there are some fund managers who earn much higher returns than the market average, and in some...

Q: Contrast mutual fund ownership with direct investment in stocks and bonds.

Contrast mutual fund ownership with direct investment in stocks and bonds. Assume your class is going to debate the merits of investing through mutual funds versus investing directly in stocks and bon...

Q: In the absence of any load charges, open-end mutual

In the absence of any load charges, open-end mutual funds are priced at (or very close to) their net asset values, whereas closed-end funds rarely trade at their NAVs. Explain why one type of fund wou...

Q: Daryl Kearns saved $240,000 during the 30 years that

Daryl Kearns saved $240,000 during the 30 years that he worked for a major corporation. Now he has retired at the age of 60 and has begun to draw a comfortable pension check every month. He wants to e...

Q: The Kardell paper mill was established at the turn of the century

The Kardell paper mill was established at the turn of the century on the Cherokee River in southeastern Ontario by the Kardell family. By 1985, the Kardell Paper Co. had outgrown its original mill and...

Q: At the end of 2018, the RBC Canadian Dividend Fund was

At the end of 2018, the RBC Canadian Dividend Fund was the largest equity mutual fund in Canada. The aggregate market value of its holdings at the end of 2018 was $18.8 billion. The fund’s annual retu...

Q: In June of 2006, AIC Limited published full-page advertisements

In June of 2006, AIC Limited published full-page advertisements focused on the fact that its AIC Advantage Mutual Fund was Canada’s “Best Performing Canadian Equity Fund” over the 20 years ending May...

Q: Pascal has just agreed with his financial planner to begin a voluntary

Pascal has just agreed with his financial planner to begin a voluntary accumulation plan. He will invest $500 at the end of every three months in a balanced mutual fund. How much will the plan be wort...

Q: An investor accumulated 1800 shares of Microtel Corporation over a period of

An investor accumulated 1800 shares of Microtel Corporation over a period of several months. She bought 1000 shares at $15.63, 500 shares at $19.00, and 300 shares at $21.75. What was her average cost...

Q: Salvatore will contribute $500 to a mutual fund at the beginning

Salvatore will contribute $500 to a mutual fund at the beginning of each calendar quarter. 1. What will be the value of his mutual fund after 6 1 2 years if the fund earns 7.6% compounded annually? 2....

Q: For the past 13 years, Ms. Perrault has contributed $

For the past 13 years, Ms. Perrault has contributed $2000 at the beginning of every six months to a mutual fund. If the mutual fund statement at the end of the 13 years reports that her fund units are...

Q: If the holding-period return on a money market mutual fund

If the holding-period return on a money market mutual fund for the most recent seven days is 0.081%, what current (simple) yield and effective annualized yield will be quoted for the fund in the finan...

Q: If the holding-period return on a money market mutual fund

If the holding-period return on a money market mutual fund for the most recent seven days is 0.097%, what current (simple) and effective annualized yields will be quoted for the fund in the financial...

Q: The current (simple annualized) yield, based on the holding

The current (simple annualized) yield, based on the holding-period return for the most recent seven days, is reported for a money market mutual fund as 4.54%. What is the fund’s corresponding effectiv...

Q: Ms. Yong invested a total of $73,400 in

Ms. Yong invested a total of $73,400 in three mutual funds as shown in the following table. The third column shows the change in value of each fund during the subsequent six months. What was the perce...

Q: Erin has invested in both an equity mutual fund and a bond

Erin has invested in both an equity mutual fund and a bond mutual fund. Her financial adviser told her that her overall portfolio rose in value by 1.1% last year. Erin noted in the newspaper that the...

Q: Mutual Fund A charges an annual management fee of 2.38

Mutual Fund A charges an annual management fee of 2.38% of money under management. The corresponding management fee for Mutual Fund B is 1.65%. On the same invested amount, what percentage more fees w...

Q: Answering this question occupies dozens of financial commentaries as the March 1

Answering this question occupies dozens of financial commentaries as the March 1 RRSP contribution deadline approaches each year. Many financial institutions and mutual fund companies promote the idea...

Q: Victor cannot find the original record of his purchase four years ago

Victor cannot find the original record of his purchase four years ago of units of the Imperial Global Fund. The current statement from the fund shows that the total current value of the units is $47,5...

Q: One year ago, $13,000 was invested in units

One year ago, $13,000 was invested in units of a mutual fund. The units paid a distribution of $260 during the year, but the mutual fund units are now worth only $11,400. What has been the: 1. Income...

Q: An international equity mutual fund includes American stocks, Japanese stocks,

An international equity mutual fund includes American stocks, Japanese stocks, German stocks, and British stocks in the ratio 27 : 19 : 14 : 11, respectively. If its current holdings of German stocks...

Q: Last year, Reliable Securities established a sales achievement bonus fund of

Last year, Reliable Securities established a sales achievement bonus fund of $10,000 to be distributed at the year-end among its four-person mutual fund salesforce. The distribution is to be made in t...

Q: A money market mutual fund purchased $1 million face value of

A money market mutual fund purchased $1 million face value of Honda Canada Finance Inc. 90-day commercial paper 28 days after its issue. What price was paid if the paper was discounted at 2.10%?

Q: The accounting firm of Barnes and Fischer, LLP, is a

The accounting firm of Barnes and Fischer, LLP, is a medium-sized, national CPA firm. The partnership, formed in 1954, now has over 4,000 professionals on the payroll. The firm mainly provides auditin...

Q: Based on Marcus (1990). The Balboa mutual fund has beaten

Based on Marcus (1990). The Balboa mutual fund has beaten the Standard and Poor’s 500 during 11 of the last 13 years. People use this as an argument that you can beat the market. Here is another way t...

Q: You have received a year-end bonus of $5000.

You have received a year-end bonus of $5000. You decide to invest the money in the stock market and have narrowed your investment options down to two mutual funds. The following data represent the his...

Q: Morningstar is a mutual fund rating agency. It ranks a fund’s

Morningstar is a mutual fund rating agency. It ranks a fund’s performance by using one to five stars. A one-star mutual fund is in the bottom 10% of its investment class; a five-star mutual fund is at...

Q: A mutual fund is a professionally managed investment that can be sold

A mutual fund is a professionally managed investment that can be sold to the general public. Mutual funds can be specialized into different categories such as healthcare-related or technology-related...

Q: Following are the data on percentage of investments in energy securities and

Following are the data on percentage of investments in energy securities and tax efficiency. At the 2.5% significance level, do the data provide sufficient evidence to conclude that percentage of inve...

Q: Tax efficiency is a measure—ranging from 0 to 100—

Tax efficiency is a measure—ranging from 0 to 100—of how much tax due to capital gains stock or mutual funds investors pay on their investments each year; the higher the tax efficiency, the lower is t...

Q: Use the data on percentage of investments in energy securities and tax

Use the data on percentage of investments in energy securities and tax efficiency from Exercise 14.22. a. compute the standard error of the estimate and interpret your answer. b. interpret your result...

Q: Following are the data on percentage of investments in energy securities and

Following are the data on percentage of investments in energy securities and tax efficiency. a. Obtain a point estimate for the mean tax efficiency of all mutual fund portfolios with 6% of their inves...

Q: Tax efficiency is a measure, ranging from 0 to 100,

Tax efficiency is a measure, ranging from 0 to 100, of how much tax due to capital gains stock or mutual funds investors pay on their investments each year; the higher the tax efficiency, the lower is...

Q: In Exercise 4.58, you determined a regression equation that

In Exercise 4.58, you determined a regression equation that relates the variables percentage of investments in energy securities and tax efficiency for mutual fund portfolios. a. Should that regressio...