Podcast
Questions and Answers
Which type of mutual fund is most popular based on market share?
Which type of mutual fund is most popular based on market share?
- Equity funds (correct)
- Hybrid funds
- Money market funds
- Bond funds
What percentage of US individuals had mutual funds in 2015?
What percentage of US individuals had mutual funds in 2015?
- 20%
- 30%
- 44% (correct)
- 50%
What type of securities do individuals in their 80s prefer, according to the text?
What type of securities do individuals in their 80s prefer, according to the text?
- Money market funds
- Target Date Funds
- Equity Funds
- Bonds (correct)
What does the Sharpe Ratio measure?
What does the Sharpe Ratio measure?
What are the two main structures of mutual funds mentioned in the text?
What are the two main structures of mutual funds mentioned in the text?
Which type of fund offers higher returns than bank deposits but is not federally insured?
Which type of fund offers higher returns than bank deposits but is not federally insured?
What type of funds do 20-year-olds favor, according to the text?
What type of funds do 20-year-olds favor, according to the text?
What indices are involved in mutual fund trading, as per the text?
What indices are involved in mutual fund trading, as per the text?
What do index funds (ETFs) offer, as mentioned in the text?
What do index funds (ETFs) offer, as mentioned in the text?
What type of mutual fund fees can significantly impact investment returns, as per the text?
What type of mutual fund fees can significantly impact investment returns, as per the text?
What is the Net Asset Value (NAV) of a mutual fund?
What is the Net Asset Value (NAV) of a mutual fund?
What is the primary advantage of liquidity intermediation provided by mutual funds?
What is the primary advantage of liquidity intermediation provided by mutual funds?
What does 'Asset under Management' (AUM) refer to in the context of mutual funds?
What does 'Asset under Management' (AUM) refer to in the context of mutual funds?
What is the purpose of denomination intermediation provided by mutual funds?
What is the purpose of denomination intermediation provided by mutual funds?
What is one of the benefits of diversification provided by mutual funds?
What is one of the benefits of diversification provided by mutual funds?
What advantage do mutual funds have in terms of cost negotiation?
What advantage do mutual funds have in terms of cost negotiation?
In the context of mutual funds, what does AUM Fee refer to?
In the context of mutual funds, what does AUM Fee refer to?
What happens to the Net Asset Value (NAV) of a mutual fund if it realizes a gain?
What happens to the Net Asset Value (NAV) of a mutual fund if it realizes a gain?
What is the primary characteristic of a closed-ended fund?
What is the primary characteristic of a closed-ended fund?
Do fund managers consistently beat markets?
Do fund managers consistently beat markets?
What is the minimum investment required for hedge funds?
What is the minimum investment required for hedge funds?
What strategy do hedge funds engage in?
What strategy do hedge funds engage in?
What investment vehicle was banned after the 2007/2008 financial crisis?
What investment vehicle was banned after the 2007/2008 financial crisis?
What type of funds do not involve active management?
What type of funds do not involve active management?
How is the Net Asset Value (NAV) of a mutual fund calculated?
How is the Net Asset Value (NAV) of a mutual fund calculated?
What conflict of interest arises from managers being compensated as a percentage of funds under management?
What conflict of interest arises from managers being compensated as a percentage of funds under management?
What has led to increased government responses in the mutual fund industry?
What has led to increased government responses in the mutual fund industry?
What type of funds saw more inflows before 2015?
What type of funds saw more inflows before 2015?
What does the new number of shares and price per share depend on when an investor sends a fund a check?
What does the new number of shares and price per share depend on when an investor sends a fund a check?
What type of investment has high profitability but a decreased internal rate of return due to increased competition?
What type of investment has high profitability but a decreased internal rate of return due to increased competition?
What is the new number of shares and price per share after the investor sends a fund a check for $50,000 with no front-end load?
What is the new number of shares and price per share after the investor sends a fund a check for $50,000 with no front-end load?
What is the Net Asset Value (NAV) per share for the mutual fund with 8,420 shares outstanding?
What is the Net Asset Value (NAV) per share for the mutual fund with 8,420 shares outstanding?
If the manager purchases 1,800 shares of stock 3 and the rest is held in cash, what is the value of the stock 3 purchased by the manager?
If the manager purchases 1,800 shares of stock 3 and the rest is held in cash, what is the value of the stock 3 purchased by the manager?
What is the Net Asset Value (NAV) per share for the mutual fund with 8,420 shares outstanding?
What is the Net Asset Value (NAV) per share for the mutual fund with 8,420 shares outstanding?
If the manager purchases 1,800 shares of stock 3 and the rest is held in cash, what is the value of the stock 3 purchased by the manager?
If the manager purchases 1,800 shares of stock 3 and the rest is held in cash, what is the value of the stock 3 purchased by the manager?
What is the new number of shares and price per share after the investor sends a fund a check for $50,000 with no front-end load?
What is the new number of shares and price per share after the investor sends a fund a check for $50,000 with no front-end load?
If the manager purchases 1,800 shares of stock 3 and the rest is held in cash, what is the value of the stock 3 purchased by the manager?
If the manager purchases 1,800 shares of stock 3 and the rest is held in cash, what is the value of the stock 3 purchased by the manager?
What is the Net Asset Value (NAV) per share for the mutual fund with 8,420 shares outstanding?
What is the Net Asset Value (NAV) per share for the mutual fund with 8,420 shares outstanding?
What is the new number of shares and price per share after the investor sends a fund a check for $50,000 with no front-end load?
What is the new number of shares and price per share after the investor sends a fund a check for $50,000 with no front-end load?
If the investor sends a fund a check for $50,000 with no front-end load, what is the new number of shares outstanding?
If the investor sends a fund a check for $50,000 with no front-end load, what is the new number of shares outstanding?
What is the price per share after the investor sends a fund a check for $50,000 with no front-end load?
What is the price per share after the investor sends a fund a check for $50,000 with no front-end load?
If the manager purchases 1,800 shares of stock 3 and the rest is held in cash, what is the value of the stock 3 purchased by the manager?
If the manager purchases 1,800 shares of stock 3 and the rest is held in cash, what is the value of the stock 3 purchased by the manager?
Study Notes
Understanding Investment Vehicles and Conflicts of Interest
- Hedge funds are available to wealthy investors, require a minimum investment of around $1 million, have high fees (around 1% of assets and 20% of profits), and are highly leveraged.
- ETFs mimic hedge funds but are more accessible, liquid, and have lower fees, and are priced via stock exchanges.
- Hedge funds engage in market-neutral trades and the LTCM investment in Treasury bonds illustrates this strategy.
- Short selling involves borrowing shares, selling them, and then buying them back at a lower price, but it was banned after the 2007/2008 financial crisis.
- Private equity invests in private companies and has high profitability, but the internal rate of return has decreased due to increased competition.
- Conflicts of interest in the mutual fund industry include late trading and market timing, leading to government responses such as requiring more independent directors and imposing redemption fees.
- Index funds do not involve active management and have lower fees than actively managed funds.
- Conflict of interest between shareholders and investment managers arises from managers being compensated as a percentage of funds under management, incentivizing them to increase total assets at the expense of shareholder return.
- Calculating the Net Asset Value (NAV) of a mutual fund involves adding the value of all assets and dividing by the number of outstanding shares.
- When an investor sends a fund a check, the new number of shares and price per share are calculated based on the new fund value and the amount of the check.
- After selling shares, the profit and annualized return can be calculated, and the fund may need to sell assets to raise needed funds.
- Actively managed fund rates saw more inflows, but since 2015 index funds have become more popular due to their lower costs.
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Description
Test your knowledge of investment vehicles and conflicts of interest with this quiz. Explore topics such as hedge funds, ETFs, short selling, private equity, mutual funds, index funds, and conflicts of interest in the investment industry.
