Question

1) An negative feature of Exchange Traded Funds (ETFs) is:

A. the price of the fund may not match the Net Asset Value

B. the investor has less control over tax implications of trading than with a mutual fund

C. ETFs charge higher fees to investors than mutual funds

D. none of the above

2) An negative feature of mutual funds is:

A. the price of the fund may not match the Net Asset Value

B. the investor has less control over tax implications of trading than with an ETF

C. mutual funds typically have very high beta

D. none of the above

3) An attractive feature of mutual funds is:

A. the price of the fund always matches the Net Asset Value

B. the investor has more control over tax implications of trading than with a mutual fund

C. mutual funds typically charge lower fees to investors than ETFs

D. mutual funds consistently produce positive alphas

4) When we analyze the performance of an actively managed mutual fund we find that the fund generated a beta of 0.5 and an alpha of -1%.

A. this result shows that the manager took relatively low risk when investing

B. the alpha reported is good, considering the level of risk taken

C. both (A) and (B) are true

D. none of the above

5) A negative alpha for a mutual fund means:

A. the fund invested in assets which were below average levels of risk

B. the fund manager’s returns were lower than expected

C. the fund’s shares decreased in value during the period being analyzed

D. all of the above

6) An index fund should _______ for us to conclude that it performed well.

A. have a positive alpha

B. have a beta significantly greater than 1

C. have a beta equal to 1.

D. have an alpha equal to 0.

7) When we analyze the performance of an actively managed mutual fund we find that the fund generated a beta of 1.5 and an alpha of 2%.

A. the alpha is low, considering the high risk that was taken

B. this result shows that the manager did not add any value to performance with his/her decision-making

C. both (A) and (B) are true

D. none of the above

Answer 1