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Midterm

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Department
Management
Course
MGT330H5
Professor
Lisa K
Semester
Fall

Description
Page 1 of 41 1 point2 4 pointsa Name at least one important difference between exchangetraded funds and mutual funds 1 point b How can an investor determine whether an exchangetraded fund is trading at a premium Be specific 1 point c Suppose you hold an ETF that has a beta of 2 with respect to the SP500Draw a graph with returns on the yaxis and time on the xaxis depicting a plot of what each return might look like over time using smooth lines one seriesline should be hypothetical returns on the SP500 and the other seriesline should be hypothetical returns on a portfolio with a beta of 2 with respect to the SP500 Be sure to include both bull and bear market conditions in your graph 1 point d Suppose you own units of a mutual fund called APEX that had yearend assets of 457000000 and liabilities of 17000000 The assets consist of 5000000 shares of ABC 2000000 shares of DEF and 1000000 shares of GHI There are 24300000 shares of APEX outstanding at year end Is it possible to calculate the net asset value of APEX If so do 1 pointAnswer a ETFs typically have lower management expense ratios than mutual funds ETFs are typically though not always passively managed whereas mutual funds are typically actively managed ETFs can be bought and sold on markets just like stocks whereas mutual funds typically have to be purchased through an intermediary who may charge a load b One needs to compare the closing market price of the ETF to the NAV for that day If the price exceeds NAV it is trading at a premium If the price is less than NAV it is trading at a discount c The plot should demonstrate that as the SP500 goes up and down the ETF generally moves in the opposite direction by double the magnitude d NAV45700000017000000243000001811 3 2 points th day of each Consider the following monthly market closing prices for a security reported for the 10month listed from oldest to newest Assume you purchased the security at the closing price on Nov 10 and sold the security at the closing price the following August 10 The security did not experience any unusual events such as capital or share distributions over this ninemonth periodDatePrice Nov 10100 Dec 10111 Jan 10118 Feb 10125 Mar 10119 Apr 10126 May 10124 June 10118 July 10113 Aug 10106a Calculate the holding period return for this security 1 point b Based on the holding period return calculate the effective annual rate of return for this security 1 pointAnswer a HPRPaugPnovPnov106116
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