Question 1

These types of funds mix hedge funds and other pooled investment vehicles.

Accepted Answer

Fund of funds typically invest in a diverse range of hedge funds and other pooled investment vehicles, making them a mix of different strategies and approaches.

Question 2

As a result of the Wall Street Reform and Consumer Protection Act of 2010,

Accepted Answer

The answer of As a result of the Wall Street...

Question 3

Eveningstar open-end fund has 1,000 shares outstanding and has the following assets in its portfolio: 100 shares of Procter & Gamble (P&G)priced at $30.00,300 shares of Intel priced at $50.00 and 200 shares of Microsoft priced at $60.00.The Morningstar closed-end fund has the following stocks in its portfolio: 300 shares of P&G and 300 shares of Microsoft.It has a total of 500 shares outstanding. 
-Suppose Morningstar issues another 250 shares and purchases shares of Intel with the funds.What is its new NAV of Morningstar? (Assume the NAV found before the price change in P&G and Microsoft in the previous question).

Accepted Answer

11efb849_3631_2b2f_9137_07554f278296_TB1314_00
Morningstar issues 250 shares and collects: $30 (NAV) x 250 shares = $7,500
 Shares of Intel purchased: $7,500 x 50 per share = 150
 
 New net asset value = $30.00
 
 Since issuing new shares brings dollar-for-dollar new investment funds into the portfolio, the Net Asset Value will not change immediately because of the choice of asset to purchase.

Question 4

Which of the following hedge fund objectives would be classified under the "moderate risk" category?

Accepted Answer

The answer of Which of the following hedge fund objectives...

Question 5

What does a hurdle rate specified by a hedge fund indicate?

Accepted Answer

A hurdle rate specified by a hedge fund indicates the minimum annualized performance benchmark that must be realized before a performance fee can be assessed. This ensures that the fund manager is incentivized to achieve a certain level of performance before being compensated with a performance fee.

Question 6

For mutual funds outside the United States,total amounts invested in this fund category topped the list in 2015.

Accepted Answer

According to the given information, the total amounts invested in mutual funds outside the United States topped the list in 2015. Among the given options, equity funds are the most popular and offer the potential for higher returns. Therefore, choice (A) equity funds is the best option.

Question 7

The hedge fund industry is built on the theory that

Accepted Answer

The answer of The hedge fund industry is built on...

Question 8

It is estimated that 75 percent of all hedge funds are located in

Accepted Answer

The Cayman Islands is a well-known offshore financial center and a popular jurisdiction for hedge funds due to its favorable tax laws and regulatory environment. It is estimated that around 75 percent of all hedge funds are registered in the Cayman Islands.

Question 9

Which of the following is common to both hedge funds and mutual funds?

Accepted Answer

Both hedge funds and mutual funds charge management fees for their services. SEC registration and disclosure rules are required for mutual funds, but not necessarily for hedge funds. Performance fees are more commonly associated with hedge funds than with mutual funds.

Question 10

Which of the following is the term used to link the hedge fund manager's incentives more closely to those of the fund investors and to reduce the manager's incentive to increase the risk of trades?

Accepted Answer

High-water marks are a performance-based incentive structure that aims to align the interests of hedge fund managers with those of investors by rewarding managers only for gains made over previous high points in fund returns. This reduces the incentive for managers to engage in risky trading behaviors that could jeopardize investors' capital.

Question 11

Hedge fund data such as assets held and trading activity

Accepted Answer

Hedge fund data is primarily self-reported by the hedge fund itself, as they are not required to disclose detailed information publicly like mutual funds.

Question 12

Eveningstar open-end fund has 1,000 shares outstanding and has the following assets in its portfolio: 100 shares of Procter & Gamble (P&G)priced at $30.00,300 shares of Intel priced at $50.00 and 200 shares of Microsoft priced at $60.00.The Morningstar closed-end fund has the following stocks in its portfolio: 300 shares of P&G and 300 shares of Microsoft.It has a total of 500 shares outstanding. 
-What is the NAV of both funds?

Accepted Answer

The net asset values (NAVs)are $30.00 and $54.00 respectively
 11efb848_5f9d_d54c_9137_797d569c3ee7_TB1314_00 
 The net asset values (NAVs) are $30.00 and $54.00 respectively

Question 13

Match the following pieces of legislation with the function achieved by each regulation as stated in the question.
-Requires mutual funds to develop mechanisms and procedures to avoid insider trading abuses.

Accepted Answer

The answer of Match the following pieces of legislation with...

Question 14

These "more risky" hedge funds aim to profit from changes in global economies,typically brought about by shifts in government policy that impact interest rates.

Accepted Answer

Hedge funds that aim to profit from changes in global economies brought about by shifts in government policy are usually referred to as Macro funds.

Question 15

Which of the following hedge fund objectives would be classified under the "risk avoidance" category?

Accepted Answer

The answer of Which of the following hedge fund objectives...

Question 16

Which of the following hedge fund objectives would be classified under the "more risky" category?

Accepted Answer

The answer of Which of the following hedge fund objectives...

Question 17

Eveningstar open-end fund has 1,000 shares outstanding and has the following assets in its portfolio: 100 shares of Procter & Gamble (P&G)priced at $30.00,300 shares of Intel priced at $50.00 and 200 shares of Microsoft priced at $60.00.The Morningstar closed-end fund has the following stocks in its portfolio: 300 shares of P&G and 300 shares of Microsoft.It has a total of 500 shares outstanding. 
-To what level should the price of Microsoft shares decline in order for the NAV of Morningstar fund to remain constant if the price of P&G rises to $40?

Accepted Answer

$11,000 F1F1F1S1F1F1F10 200 shares = $55.0011efb848_9a85_7bed_9137_299658468427_TB1314_00
If P&G increases to $40.00, the value of holdings in Microsoft must decrease by $1,000.
$1,000 x 200 shares = $5.00 decrease from its current price of $60.00
Also, total value of Microsoft in the portfolio must decrease by $1,000 to $11,000:
$11,000 x 200 shares = $55.00

Question 18

Eveningstar open-end fund has 1,000 shares outstanding and has the following assets in its portfolio: 100 shares of Procter & Gamble (P&G)priced at $30.00,300 shares of Intel priced at $50.00 and 200 shares of Microsoft priced at $60.00.The Morningstar closed-end fund has the following stocks in its portfolio: 300 shares of P&G and 300 shares of Microsoft.It has a total of 500 shares outstanding. 
-If the price of P&G shares rises to $35 and the price of Microsoft falls to $40.00,what is the new NAV of both funds?

Accepted Answer

The net asset values (NAVs)are $26.50 and $45.00 respectively 11efb848_c245_b91e_9137_27f275b0c633_TB1314_00
The net asset values (NAVs) are $26.50 and $45.00 respectively

Question 19

To be deemed "accredited" and able to invest in a hedge fund,an investor must have

Accepted Answer

To be an accredited investor, an individual must have an annual income of at least $200,000 (or $300,000 if married) or a net worth exceeding $1 million, excluding the value of their primary residence.

Question 20

Which of the following observations concerning hedge funds is NOT true?

Accepted Answer

Hedge funds are not required to disclose their activities to third parties, as they are generally considered to be private investment vehicles for wealthy individuals and institutions.

Quiz 5: Financial Services: Mutual Fund and Hedge Fund Companies

These types of funds mix hedge funds and other pooled investment vehicles.

As a result of the Wall Street Reform and Consumer Protection Act of 2010,

Which of the following hedge fund objectives would be classified under the "moderate risk" category?

What does a hurdle rate specified by a hedge fund indicate?

For mutual funds outside the United States,total amounts invested in this fund category topped the list in 2015.

The hedge fund industry is built on the theory that

It is estimated that 75 percent of all hedge funds are located in

Which of the following is common to both hedge funds and mutual funds?

Which of the following is the term used to link the hedge fund manager's incentives more closely to those of the fund investors and to reduce the manager's incentive to increase the risk of trades?

Hedge fund data such as assets held and trading activity

Match the following pieces of legislation with the function achieved by each regulation as stated in the question. -Requires mutual funds to develop mechanisms and procedures to avoid insider trading abuses.

These "more risky" hedge funds aim to profit from changes in global economies,typically brought about by shifts in government policy that impact interest rates.

Which of the following hedge fund objectives would be classified under the "risk avoidance" category?

Which of the following hedge fund objectives would be classified under the "more risky" category?

To be deemed "accredited" and able to invest in a hedge fund,an investor must have

Which of the following observations concerning hedge funds is NOT true?