Summary: Series 7 Top-Off Exam Quiz Lesson 45 Mutual Funds pt 3<br> This is the Series 7 Top-Off Exam Quiz Lesson 45 Mutual Funds pt 3<br> <br> Questions covered include<br> <br> 1. Which of the following is true about hedge funds?<br> (Select all that apply.)<br> A. They are not allowed to cut off withdrawals by their investors.<br> B. They are open to any kind of investor.<br> C. They charge a management fee.<br> D. They have a cap on the amount that is available to be withdrawn at any given time.<br> <br> 2. What is the minimum capital for a hedge fund?<br> A. $100,000<br> B. $200,000<br> C. $500,000<br> D. $1,000,000<br> <br> 3. Which of the following is qualified as an accredited investor according to the Securities Act of 1933?<br> (Select all that apply.)<br> A. a bank<br> B. a charitable organization with a total asset of $5 million<br> C. a trust with a total asset of $10 million<br> D. an employee benefit plan that has a total asset of $3 million<br> <br> 4. A business is qualified to be an accredited investor if all its equity owners are accredited investors.<br> A. True<br> B. False<br> <br> 5. A natural person can be an accredited investor if that person ___.<br> (Select all that apply.)<br> A. has an income exceeding $200,000 in each of the two most recent years and a reasonable expectation of the same income level in the current year<br> B. has individual net worth that exceeds $1 million including the value of the primary residence of such person<br> C. has a joint income with the spouse exceeding $200,000 in each of the two most recent years and a reasonable expectation of the same income in the current year<br> D. has a joint net worth with the person’s spouse that exceeds $1 million excluding the value of the primary residence of such person<br> <br> 6. The performance of a hedge fund is always better than the market.<br> A. True<br> B. False<br> <br> 7. Which of the following strategies does a hedge fund employ?<br> (Select all that apply.)<br> A. global macro hedge fund strategy<br> B. relative value arbitrage<br> C. high-frequency trading<br> D. currency strategies<br> <br> 8. A mutual fund’s annual and semiannual report has an income statement similar to a regular corporate income statement.<br> A. True<br> B. False<br> <br> 9. Which of the following can be found in a mutual fund’s income statement?<br> (Select all that apply.)<br> A. dividends<br> B. capital gains<br> C. expenses<br> D. net income<br> <br> 10. Which of the following is true about expense ratio?<br> (Select all that apply.)<br> A. It applies to closed-end funds but not to open-end funds.<br> B. It gives an overall look at how much it costs to pay the management to buy the stocks instead of buying it yourself without paying any management fee.<br> C. It is the total net assets divided by the total expenses.<br> D. It shows the efficiency of the fund.<br> <br> 11. If you’re buying a fund at a very big discount but has a very high expense ratio, the discount you’re buying those stocks may disappear.<br> A. True<br> B. False<br> <br> 12. An investment company should distribute at least ___ of its income in order to be regulated under the Investment Company Act of 1940.<br> A. 80%<br> B. 85%<br> C. 90%<br> D. 95%<br> <br> 13. If an investment company is not regulated under the Investment Company Act of 1940, ___.<br> A. it becomes taxed as a regular corporation<br> B. it has to pay an additional tax equivalent to 2% of the total capital gains<br> C. it will require double management fees<br> D. its net pass is not taxed<br> <br> 14. Investment companies can pass through capital gains ___.<br> A. monthly<br> B. quarterly<br> C. semiannually<br> D. at the end of the year<br> <br> 15.
