The CFA Level 1: CFA Level 1 Exam Answer

Investing Exclusively in Russian Securities

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Question

A fund that invests exclusively in Russian securities would be

Answers

A. a global fund. Like most international and global funds, this one would probably be a load open-end fund.

B. a global fund. Like most international or global funds, this one would probably be a load open-end fund. There has, however, been a recent increase in the number of international funds that closed-end.

C. an international fund. Like most single country and emerging market funds, this one would probably be a closed-end fund. Most international and global funds, however, are load open-end funds.

D. an international fund. Like most international and global funds, this one would probably be a no-load open-end fund. There has, however, been a recent increase in the number of international funds that are closed-end.

E. an international fund. Like most single country and emerging market funds, this one would probably be a closed-end fund. Most international and global funds, however, are no-load open-end funds.

F. an international fund. Like most international and global funds, this one would probably be a load open-end fund. There has, however, been a recent increase in the number of international funds that are closed-end.

G. a global fund. Like most international or global funds, this one would probably be a closed-end fund.

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Explanations

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A. B. C. D. E. F. G.

Funds that invest in non-U.S. securities are referred to as foreign funds. Foreign funds can be divided into two categories: (1) international funds, which invest only in non-U.S. stocks, (2) and global funds, which invest in both U.S. and non-U.S. securities. Most global and international funds are no-load open-end funds, although there are still a significant number of closed-end funds. Closed-end funds have the advantage of not being subject to major investor liquidations that would require the sale of stocks on an illiquid foreign stock exchange.

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