Question 1

Which of the following formulae is used to calculate the net dividend income per share of a mutual fund?

Options :

A :

Subtract operating expenses from dividend and interest income and divide the result by the number of outstanding shares.

B : Divide gross investment income by the number of outstanding shares.

C :

Subtract operating expenses from the income derived from dividends, interest, and short -term capital gains earned by the fund and divide the result by the number of outstanding shares.

D :

Add dividends, interest, and short-term and long-term capital gains earned by the fund; subtract operating expenses; then divide the result by the number of outstanding shares.

Answer: A

Question 2

Which of the following steps in the underwriting process will occur last?

Options :

A : The underwriting syndicate is formed.

B : The selling group is organized.

C : The public offering price is set.

D : A red herring prospectus is circulated to the public.

Answer: C

Question 3

Which of the following statements regarding CMOs is false?

Options :

A : CMOs are zero-coupon bonds that are backed by real estate.

B : Relative to other bonds, CMOs are illiquid.

C : CMO investors are divided into classes, and the class determines when the investor will receive payments of principal.

D : CMOs are considered to have lower risk and, therefore, offer lower returns.

Answer: A

Question 4

The total of a mutual fund’s front-end load, rear-end load, and 12b-1 fees may not exceed:

Options :

A : 10.0% of the fund’s offer price.

B : 10.0% of the fund’s net asset value.

C : 8.5% of the fund’s offer price.

D : 8.5% of the average annual net assets of the fund.

Answer: C

Question 5

stion No: 159 In 2004, your Uncle Oscar purchased 300 shares of Hasbro, Inc. for $19 a share. Uncle Oscar died earlier year and left his Hasbro stock to you. The stock was selling for $44 on the day he died, but by the time you learned that you were the beneficiary of the stock, the price was $47. What is your cost basis in Hasbro?

Options :

A : $19

B : $44

C : $47

D : $28

Answer: B

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