Mutual Funds and Other Investment Companies
Bodie, Investments, Sixth Edition
4. Which of the following functions do mutual fund companies perform for their
A) Record keeping and administration
B) Diversification and divisibility
C) Professional management
D) Lower transaction costs
E) All of the above.
Rationale: Mutual funds are attractive to investors because they offer all of the listed
5. Multiple Mutual Funds had year-end assets of $457,000,000 and liabilities of
There were 24,300,000 shares in the fund at year-end.
What was Multiple
Mutual's Net Asset Value?
Rationale: (457,000,000 - 17,000,000) / 24,300,000 = $18.11
6. Diversified Portfolios had year-end assets of $279,000,000 and liabilities of
If Diversified's NAV was $42.13, how many shares must have been held
in the fund?
E) None of the above.
Rationale: ($279,000,000 43,000,000) / $42.13 = 5,601,708.996.