Question 1

What is the most common reason given by American mutual fund owners for investing in funds?

Accepted Answer

A)  To reduce taxable income
B)  Saving for someone's education
C)  Saving for emergencies
D)  Saving for retirement
E)  Saving for a new carF) All of the above
G) A) and E)

Question 2

In late 2014,there were over 11,000 mutual funds.

Accepted Answer

A) True 
 B)False

Question 3

A(n) _____ fund is a fund that generally invests in the stocks or other securities contained in a specific stock or securities index.

Accepted Answer

A)  closed-end
B)  exchange-traded
C)  open-end
D)  load
E)  no-loadF) B) and D)
G) C) and D)

Question 4

Describe either the purchase options or withdrawal options that can be used to invest in or withdraw money from the investment company that sponsors an open-end mutual fund.

Accepted Answer

Purchase Options: To purchase shares in ...

Question 5

Which type of mutual fund invests in high-yield,high-risk corporate bonds?

Accepted Answer

A)  Junk-bond fund
B)  Intermediate corporate bond fund
C)  Municipal bond fund
D)  Short-term government bond fund
E)  World bond fundF) A) and B)
G) A) and C)

Question 6

A mutual fund that only invests in companies outside the United States is called a ____________ fund.

Accepted Answer

A)  growth-income
B)  income
C)  international
D)  industry
E)  globalF) C) and E)
G) All of the above

Question 7

Bob Newsome purchased 250 shares of the Northern Lights Growth Fund.The purchase cost was $30 per share and the total commission was $225.What is the load being charged by the fund?

Accepted Answer

A)  2 percent
B)  3 percent
C)  4 percent
D)  5 percent
E)  8.5 percentF) A) and E)
G) C) and D)

Question 8

A mutual fund that requires investors to make regular purchases over a specified period of time is called a:

Accepted Answer

A)  regular account.
B)  voluntary savings plan.
C)  contractual savings plan.
D)  minimum withdrawal plan.
E)  free contract plan.F) A) and C)
G) A) and E)

Question 9

Many investors will access a fund's_____ by using the Internet.It includes a letter from the fund's independent auditors that provides an opinion as to the accuracy of the fund's financial statements.

Accepted Answer

A)  annual report.
B)  12b
C)  annual prospectus.
D)  annual summary report from the president of the investment company.
E)  copy of the annual mutual funds report containing a summary of the professional advisory services comments.F) A) and C)
G) A) and B)

Question 10

Your parents are considering the purchase of shares in a mutual fund.Discuss three advantages and three that you believe are important for potential investors to consider.

Accepted Answer

Students may choose from the following a...

Question 11

If you need your money in a short period of time,you should consider conservative investments with less risk.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is a disadvantage associated with purchasing a mutual fund?

Accepted Answer

A)  Difficulty of buying and selling shares
B)  Aggressive or unethical sales personnel
C)  Only one withdrawal option
D)  No distribution of income and capital gains
E)  Professional managementF) None of the above
G) B) and D)

Question 13

Explain the difference between a load fund and a no-load fund.From a performance standpoint,is there a significant difference between mutual funds that charge commissions and those that do not?

Accepted Answer

A load fund is a mutual fund in which in...

Question 14

The value of a mutual fund's portfolio minus the mutual fund's liabilities,equals a figure that when divided by the number of shares outstanding,gives you the:

Accepted Answer

A)  book value.
B)  outstanding balance.
C)  LIBOR rate.
D)  net asset value.
E)  accounting value.F) A) and B)
G) A) and C)

Question 15

Which one of the following statements is false?

Accepted Answer

A)  The responsibility for choosing the right mutual fund rests with the individual investor.
B)  Professional fund managers do make mistakes.
C)  Investors should evaluate their investments on a regular basis.
D)  There is no need to evaluate mutual fund investments, because investment companies hire the best professional managers they can to manage their funds.
E)  Individual investors should be involved in choosing a mutual fund, because they know how the objectives of a mutual fund match their own investment objectives.F) B) and C)
G) A) and B)

Question 16

Mutual funds that invest in smaller,lesser-known companies that offer higher growth potential are referred to as sector funds.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is true?

Accepted Answer

A)  About 90 million individual Americans own mutual funds.
B)  Nearly forty-five percent of all U.S.households own mutual funds.
C)  There are more than 11,000 mutual funds available.
D)  By the end of 2014, the combined value of assets held by mutual funds totaled 18 trillion dollars.
E)  All of these statements are true.F) B) and C)
G) A) and D)

Question 18

Asset allocation funds invest in various asset classes including stocks,bonds,fixed-income securities,and money market instruments.

Accepted Answer

A) True 
 B)False

Question 19

The Capitalist Mutual Fund's portfolio is valued at $45 million.The fund has liabilities of $3 million,and the investment company sponsoring the fund has issued 1,600,000 shares.What is the fund's net asset value?

Accepted Answer

A)  $100.00
B)  $26.25
C)  $52.50
D)  $3.75
E)  $1.00F) A) and B)
G) None of the above

Question 20

All information related to management fees,contingent deferred sales fees,12b-1 fees,and other expenses are contained in a mutual fund's prospectus

Accepted Answer

A) True 
 B)False

Exam 16: Investing in Mutual Funds

Describe either the purchase options or withdrawal options that can be used to invest in or withdraw money from the investment company that sponsors an open-end mutual fund.

Correct AnswerverifiedPurchase Options: To purchase shares in ...View AnswerShow Answer

Which of the following is a disadvantage associated with purchasing a mutual fund?

Correct AnswerverifiedShow Answer

The Capitalist Mutual Fund's portfolio is valued at $45 million.The fund has liabilities of $3 million,and the investment company sponsoring the fund has issued 1,600,000 shares.What is the fund's net asset value?

Correct AnswerverifiedShow Answer

In late 2014,there were over 11,000 mutual funds.

Correct AnswerverifiedShow Answer

Mutual funds that invest in smaller,lesser-known companies that offer higher growth potential are referred to as sector funds.

Correct AnswerverifiedShow Answer

A mutual fund that only invests in companies outside the United States is called a ____________ fund.

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

If you need your money in a short period of time,you should consider conservative investments with less risk.

Correct AnswerverifiedShow Answer

Many investors will access a fund's_____ by using the Internet.It includes a letter from the fund's independent auditors that provides an opinion as to the accuracy of the fund's financial statements.

Correct AnswerverifiedShow Answer

A(n) _____ fund is a fund that generally invests in the stocks or other securities contained in a specific stock or securities index.

Correct AnswerverifiedShow Answer

Explain the difference between a load fund and a no-load fund.From a performance standpoint,is there a significant difference between mutual funds that charge commissions and those that do not?

Correct AnswerverifiedA load fund is a mutual fund in which in...View AnswerShow Answer

Asset allocation funds invest in various asset classes including stocks,bonds,fixed-income securities,and money market instruments.

Correct AnswerverifiedShow Answer

Which one of the following statements is false?

Correct AnswerverifiedShow Answer

Which type of mutual fund invests in high-yield,high-risk corporate bonds?

Correct AnswerverifiedShow Answer

The value of a mutual fund's portfolio minus the mutual fund's liabilities,equals a figure that when divided by the number of shares outstanding,gives you the:

Correct AnswerverifiedShow Answer

Your parents are considering the purchase of shares in a mutual fund.Discuss three advantages and three that you believe are important for potential investors to consider.

Correct AnswerverifiedStudents may choose from the following a...View AnswerShow Answer

Bob Newsome purchased 250 shares of the Northern Lights Growth Fund.The purchase cost was $30 per share and the total commission was $225.What is the load being charged by the fund?

Correct AnswerverifiedShow Answer

All information related to management fees,contingent deferred sales fees,12b-1 fees,and other expenses are contained in a mutual fund's prospectus

Correct AnswerverifiedShow Answer

What is the most common reason given by American mutual fund owners for investing in funds?

Correct AnswerverifiedShow Answer

A mutual fund that requires investors to make regular purchases over a specified period of time is called a:

Correct AnswerverifiedShow Answer

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A load fund is a mutual fund in which in...
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Students may choose from the following a...
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