5) In the Wall Street Journal’s darts versus proscompetition, the difference in returns generated by the twoportfolios is explained by:

I. the darts were poorly thrown
II. the pros pick riskier stocks
III. other investors buying the stocks that the pros pick
IV. the pros are simply good at picking stocks

A. I and II
B. II only
C. IV only
D. II and III

6) __________ is a false statement regarding open-endmutual funds.

A. They offer investors a guaranteed rate of return
B. They offer investors a well diversified portfolio
C. They redeem shares at their net asset value
D. None of the above (A, B, and C are all true)

7) When we analyze the performance of an activelymanaged mutual fund we find that the fund generated a beta of 1.5and an alpha of zero.

A. this result shows that the manager took relativelyhigh risk when investing

B. this result shows that the manager did not add anyvalue to performance with his/her decision-making

C. both (A) and (B) are true

D. none of the above

8) An attractive feature of Exchange Traded Funds (ETFs)is:

A. the price of the fund always matches the Net AssetValue

B. the investor has more control over tax implicationsof trading than with a mutual fund

C. ETFs only trade once a day, making it easier to keeptrack of their prices.

D. the fund is highly likely to produce a positivealpha