Question

Question 3:

You are comparing the direct costs of investing in two different mutual funds. The share price (NAV) of fund A is $25.00 per share, the share price of fund B is $30.00. In this case,

A)  Fund A has lower direct costs of investing

B) Fund B has lower direct costs of investing.

C) Fund A and B have the same direct costs.

D) Fund A and B have very different costs.

E) Answer cannot be determined based on the information provided.

Question 8:

A corporate bond mutual fund receives coupon payments from the underlying corporate bonds, and then passes them on to its investors via a dividend. Suppose that the dividend is $5 per share and your income is $100,000. The mutual fund has held the underlying corporate bonds for five months. How much tax do you (as the investor) pay?

Choose all that apply (multiple answer question. Do not select all options as an incorrect answer may result in a negative score )

	A)	Ordinary federal income tax + local/state taxes (if applicable).
	B)	Long-term capital gains tax
	C)	Short-term capital gains tax.
	D)	Taxed at the same rate as regular dividends paid by stocks

Question 9:

You are interested in investing in foreign equity markets to diversify your portfolio. Which of the following is the most taxinefficient? The percentage of calendar year dividends paid by iShares ETFs that represent "qualified dividend income (QDI)" (subject to the long-term capital gains tax rate) is given below:

	A.	iShares MSCI Emerging Markets Asia ETF: QDI = 58.32%
	B.	iShares MSCI Russia ETF: QDI = 88 %
	C.	iShares Core MSCI Europe ETF: QDI = 93.62 %
	D.	iShares Europe Developed Real Estate ETF: QDI = 29.31 %

Answer 1

Answer to Question no. 3 - E

it will not be possible to compare two NAV's of a Mutual fund and analyse the cost of investing. Mutual Fund's NAV's are determined by the valuation of assets they invest in or put their money in. In this case we see that NAV of fund A is $25 and NAV of Fund B is $30. Under the assumption that these mutual funds are similar we can only comment on the fund manager's performace and conclude that Fund Manager of Mutual Fund B has outperformed as compared to its peers. (Note this statement holds true only in case if both the funds are comparable and similar).

NAV of fund is determined by valuation of its assets. Cost of investing has a very small role to play in NAV. Therefore by mere analysis of NAV it will be not be possible to comment on the cost of Investing of any of the funds.