CFS Module 2
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Where can one find out about the manager ownership of fund shares?
the shareholder's report.
What is the typical manager tenure for the 25 largest mutual funds?
8 plus years
What types of bonds does the Barclays Aggregate Bond Index include?
medium-term government and quality corporate.
Describe a fundamental factor index.
Funds based upon fundamental factors like price to book, dividends, earnings, etc....
somewhat conservative form of growth style equity selection.
What is the median compensation for a mutual fund manager?
How many funds use outside managers?
1 in 8.
What was the average tenure of fund managers whose performance consistently ranked in the top half?
According to a Lipper study (1971-2003), what happened to the performance of the top 30 mutual funds over the subsequent 5-year period?
underperformed the S&P 500 in each (and every) instance.
What do 2 standard deviations represent?
Expected returns for about 95% of the time.
Which equity categories have 2 of the highest standard deviations?
precious metals and natural resources
The S&P 500 is projected to drop by 10% next year. XYZ Blend Fund has a beta of 0.9; what annual return is projected for XYZ?
Alpha measures the difference between a fund's what?
expected returns and actual returns
Is alpha still meaningful if the fund has a low R-squared?
Does alpha reflect management's skill in selecting securities? Does a low alpha mean a mutual fund has low expenses?
What is the first step in calculating the Sharpe ratio?
subtract the T-Bill rate from the fund's return.
What is the R-squared for U.S. Treasury Bills?
What is the relationship between beta and standard deviation?
What does Sharpe ratio include in order to show risk-adjusted returns?
What are the 2 major types of value investing?
relative-value and absolute-value
Name a variation or type of techinical analysis that attempts to be on the sidelines when the market is moving downward.
What is the minium percentage of overseas holdings required for a foriegn equity fund?
What have studies generally concluded about currency hedging in funds?
They can have a moderate-to-meaningful short-term impact.
When does growth style equity investing tend to perform the best?
advanced stages of the bull market.
Differentiate between small company and capital appreciation funds.
Small company funds are almost always more conservative.
CFS Module 2
A test of the harder questions for the CFS module 2