Midterm answer key

Midterm answer key - Ec 173A MIDTERM KEY Ec 173A FINANCIAL...

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Ec 173A MIDTERM KEY p. 1 Ec 173A – FINANCIAL MARKETS Name: ANSWER KEY Foster, UCSD, Wednesday, 11 FEB 2009 MIDTERM Suggestions for partial credit in [BLUE]. Correct answer with enough work shown to allay suspicion gets full credit ; not every step in my answer key needs to be present. Part credit is for cases where final answer is NOT correct. Part credit doesn’t add to question total; at least 1 bonus point is reserved for no mistakes at all. Multiple Choice {Circle letter of BEST response.} [32 @ 2 each] 1. Which one of the following statements regarding open-end mutual funds is false? A) The funds redeem shares at net asset value. B) The funds offer investors professional management. D) Both B and C. C) The funds offer investors a guaranteed rate of return. E) Both A and B. 2. Pinnacle Fund had year-end assets of $825,000,000 and liabilities of $25,000,000. If Pinnacle's NAV was $32.18, how many shares must have been held in the fund? A) 21,619,346,92 B) 22,930,546.28 C) 24,860,161.59 D) 25,693,645.25 E) None of the above. 3. Most actively managed mutual funds, when compared to a market index such as the Wilshire 5000: A) beat the market return in all years. B) beat the market return in most years. D) do not outperform the market. C) exceed the return on index funds. E) None of the above is a correct statement. 4. The Profitability Fund had NAV per share of $17.50 on January 1, 2007. On December 31 of the same year the fund's NAV was $19.47. Income distributions were $0.75 and the fund had capital gain distributions of $1.00. Without considering taxes and transactions costs, what rate of return did an investor receive on the Profitability fund last year? A) 11.26% B) 15.54% C) 16.97 % D) 21.26% E) 9.83% 5. Differences between hedge funds and mutual funds are that: A) hedge funds are only subject to minimal SEC regulation. B) hedge funds are typically open only to wealthy or institutional investors.
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This note was uploaded on 06/30/2009 for the course ECON 173A taught by Professor Foster during the Fall '09 term at UCSD.

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Midterm answer key - Ec 173A MIDTERM KEY Ec 173A FINANCIAL...

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