Question

8. A manager manipulates accounting numbers to improve her company’s earnings per share (EPS) in the second quarter of 2016 (2016Q2). She is most likely trying to get her company’s 2016Q2 EPS to exceed its EPS in: A. 2011Q2 B. 2013Q2 C. 2015Q4 D. 2015Q2 E. 2016Q3

9. A mutual fund has $500 million in assets at the beginning of 2017 and 13 million shares outstanding. The gross return on assets in 2017 was 17% and the total expense ratio was 1.5% of the year-end value. What is the fund’s rate of return in 2017? A. 17% B. 11.5% C. 13% D. 15.25% E. 15.5%

Answer 1

8. A manager manipulates accounting numbers to improve her company’s earnings per share (EPS) in the second quarter of 2016 (2016Q2). She is most likely trying to get her company’s 2016Q2 EPS to exceed its EPS in:

correct answer : D. 2015Q2

As manager wants to improve the EPS for the second quarter 2016, he is comparing either 2016 Q2 wilth 2016 Q1 or with 2015 Q2.

so from given options correct answer is 2015Q2

9. A mutual fund has $500 million in assets at the beginning of 2017 and 13 million shares outstanding. The gross return on assets in 2017 was 17% and the total expense ratio was 1.5% of the year-end value. What is the fund’s rate of return in 2017?

correct answer is : D. 15.25%

Gross Assets in beginning = $500 million

return on assets for the year = 17% ($500 million) = $85 million

now year end value = $500 million + $85 million = $585 million

so total expenses = 1.5% of $585 million = $8.775 million

so net return on assets for the year = $585 million - $8.775 milllion = $576.225 million

so fund's rate of return = ($576.225 - $500)/$500*100 = 15.25%