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Studies or data on mutual performance versus a market index find:
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most mutual funds outperform the index. These findings refute the semi-strong efficient markets.
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most mutual funds outperform the index.These findings refute the strong form of efficient markets.
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most mutual funds under perform the index.These findings support the semi-strong form of the
efficient market. -
mutual funds are riskless compared to the index.
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- One apparent violation of the Law on One Price is the pervasive discrepancy between the prices and net asset value of closed-end mutual funds. Would you expect to observe greater discrepancies on diversified or less diversified funds? Why?“If markets are semistrong-form efficient, investors would only adopt passiveinvestment strategies and buy into an index fund, rather than active strategies wherethey would have a portfolio manager select the components of their portfolios andseek for mispriced equities.” Explain if true or notWhich of the following is most accurate in describing the problems of survivorship bias and backfill bias in the performance evaluation of hedge funds?a. Survivorship bias and backfill bias both result in upwardly biased hedge fund index returns.b. Survivorship bias and backfill bias both result in downwardly biased hedge fund index returns.c. Survivorship bias results in upwardly biased hedge fund index returns, but backfill bias results in downwardly biased hedge fund index returns.
- What problems would confront a mutual fund trying to create an index fund tied to an equally weighted index of a broad stock market?Which of the following regarding the investor sentiment theory of the closed end fund puzzle is FALSE? a) Investors in closed end funds are not as important an ownership group in the assets of the funds’ investment portfolios. b) The closed end fund is riskier than the underlying portfolio. c) Arbitrageurs are subject to limits to arbitrage. d) The noise trader risk is diversifiable.Which of the following is FALSE about the differences between ETFs and Mutual Funds? Select one or more: a. ETFs were introduced before Mutual Funds b. Both ETFs and Mutual Funds can be traded just like stocks c. The Mutual Fund Industry is much larger than the ETF industry d. Mutual Funds fees are typically higher than ETF fees.
- Which statement below is incorrect? Select one: A. The four "V" features of big data include volume, variety, value, and velocity. B. When the price of the underlying asset increases, the call option price will increase while the put option price will decrease. C. The Fama-French High-Minus-Low portfolio (HML) is a strategy that attempts to buy stocks with high prices and sell stocks with low prices. D. The passive mutual funds charge a lower administration fee than the active mutual funds.Open-end equity mutual funds find it necessary to keep a significant percentage of total investments, typically around 5% of the portfolio, in very liquid money market assets. Closed-end funds do not have to maintain such a position in “cash equivalent” securities. What difference between open-end and closed-end funds might account for their differing policies?‘To capture investor interest, Exchange Traded Funds (ETF) have become the latest market innovation. Since 1990, they have been actively traded in a form of basket of securities.’ Assess the main features of exchange traded funds (EFTs) drawing on their advantages and disadvantages as the cause of their popularity. Advantages Diversification Can be traded like stocks Lower fees for passively managed ETFs Reinvestment of dividends No minimum investment amount needed Lower capital gains compared to actively managed mutual funds. Discounts and premium prices are lower Disadvantages Lower levels of diversification Overkills intraday pricing Costs could be higher than mutual funds-broker fees Dividend yields are generally low. Returns on leveraged ETFs can be skewed
- An investor who uses only the Treynor ratio to evaluate the performance of a mutual fund is most likely to conclude: a. Total risk is more important than systematic risk b. The fund is not well-diversified. c. A measure of market portfolio performance is essential to evaluate the fund d. The beta of the fund captures the relevant risk of the fund.Which of the following is likely to have a price that differs from its NAV?: -open-ended mutual funds -close-ended mutual funds -exchange traded funds -actively managed funds -index fundsDifferences between hedge funds and mutual funds are that Multiple Choice A hedge fund managers can pursue strategies not available to mutual funds, such as short selling, heavy use of derivatives, and leverage. B hedge funds are typically open only to wealthy or institutional investors. C hedge funds are only subject to minimal SEC regulation. D hedge funds are commonly structured as private partnerships. E All of the options.