Question

27.      A back-end load fund has:
A. no charge upon purchase, but a fixed charge upon sale.
B. a smaller charge on purchase, and another small charge again on sale.
C. no charge upon purchase, and a declining charge, based on time owned, on sale.

28.       Sector funds offer:

                        a.         good diversification                b.         high loss/reward potential

                        c.         stable returns                           d.         none of the above

29.       For all bonds of equal risk, the bond that had the greatest duration and therefore the greatest price sensitivity is:

                        a.         treasury bonds                        b.         zero-coupon bonds

                        c.         corporate bonds                      d.         long-term government bonds

Answer 1

27.

A) no charge upon purchase, but a fixed charge upon sale.

Back end fund are also referred to as B shares. Bank end load is the fees or payment made at the time of selling mutual or ETA funds. A fixed pecentage of sale if given on them.

28.

B)high loss/reward potential

Investors should be cautious with regard to the initial offering of new sector funds. An initial offering usually occurs after the sector has already been the subject of intense interest based on recent spectacular performance. As a result, stock in that sector are often Fully priced ot overpriced.

29.

C) zero coupon bond

Duration is some measure of interest rate sensitivity. We know that the greater the duration of a security, the greater the percentage change in the market value of the security for a given change in interest rate; as a result, higher duration means higher interest rate risk.since the bond with the annual coupan rate of 5% definitely has a higher coupan rate than a zero coupon bond (0%) , therefore bond with a coupon has shorter duration and zero.coupon bond has higher duration