3. Which of the following statements about money market mutual funds is true? Th

Question

3. Which of the following statements about money market mutual funds is true? They invest in commercial paper, CD's and repos a. b. They usually offer check writing privileges. They are highly leveraged and risky d. c. They invest in commercial paper, CD's and repos. They usually offer check writing privileges. e. All of the above options are true 4. In 2012, the proportion of mutual funds specializing in common stocks was (based on total assets) a. 21.7% b. 28% . 44.8% d. 47% e. 73% f. 63.5% 5. Management fees and other expenses of mutual funds may include a. Front end loads b. Back end loads C. 12 b 1 fees d. Front end and back end loads. e. Front end, back end and 12 b 1 charges. f. None of the above 6. The PFF Fund has NAV per share of $17.50 on January 1, 2016. On December 31st of the same year, the funds NAV was $19.47. Income distributions were 0.75 cents and the fund had capital gain distributions of $1.00. Without considering taxes and transaction costs, what rate of return did an investor receive on PFF fund in 2016? a. b. c. d. e. 11.26% 15.54% 16.97% 21.26% 9.83% 20.88%

Explanation / Answer

3. The correct Answer is D. The money market funds usually invest in CD's, commercial papers and repos and they usually offer check writing priviledges.

4. The correct answer is C. 44.8%. It's a fact.

5. The correct answer is E.The front end fee is the fee paid by investor while purchasing the mutual fund share whereas the backend fee is paid when the shares are sold. 12b-1 fee is an annual marketing or distribution fee on a mutual fund. It is an operational expense.

6. To calculate the HP return of the fund we simply add the income and capital gain distributions to ending NAV, and then divide the total increase in NAV by begining NAV.

(19.47+1+0.75) - 17.5 / 17.5 = 21.26%

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