26. What is the main reason why exchange-traded funds are relatively cheap in terms of management expense ratios (MERs) compared to mutual funds?

		ETFs are exchange-traded so the buying and selling of underlying securities are charged commissions rather than fees
		Designated brokers pay trading costs and fees associated with the purchase and sale of underlying securities
		The ETF market is larger and more liquid than the mutual fund market
		Designated brokers don't actually buy the underlying securities

27. What is the Sharpe ratio for a portfolio with a return of 10% and a standard deviation of 1.2% when the risk-free rate is 4%?

		8.8%
		6.2%
		6.0%
		5.0%

28. Which structured product is most suitable for a client with a low risk tolerance and who also requires income for personal living expenses?

		Principal-protected notes
		National Housing Act mortgage-backed securities
		Asset-backed commercial paper
		Split-shares

29. Which of these exchange-traded funds (ETF) makes the greatest use of derivatives as part of its overall investment strategy?

		Standard ETF
		Leverage ETF
		Index-based ETF
		Rules-based ETF

30. A new hedge fund is launched, subject to a "high water mark" compensation structure for the management team, with a net asset value (NAV) per unit of $10. At the end of the first year, the NAV per unit rises to $12. For the first year, the manager is paid an incentive fee based on this 20% increase in value. By the end of the second year, the fund's NAV falls to $11. The fund manager will not receive an incentive fee in year two and will not qualify for an incentive fee until ...

		The NAV per share rises above $12 per unit
		The NAV per share stays above $11 per unit
		The NAV per share increases another 20%
		The fund generates a profit for investors

Answer rating: 100% (QA)

The detailed answer for the above question is provided below Ans 26 The main reason why exchangetrad... View the full answer