Question 1

What type of fund seeks to aim for income and safety?

Accepted Answer

A)  Money market
B)  Mortgage
C)  Bond
D)  Dividend
E)  BalancedF) A) and B)
G) C) and D)

Question 2

What is not an advantage of investing in mutual funds?

Accepted Answer

A)  Diversification
B)  Professional management
C)  Easy of buying and selling shares
D)  Potential market risk
E)  Switching privilegesF) C) and D)
G) A) and E)

Question 3

Another name for a mutual fund that charges a contingent deferred sales load is a(n)  ____________ fund.

Accepted Answer

A)  bare bones
B)  end state
C)  bare back
D)  back-end
E)  pay laterF) D) and E)
G) B) and E)

Question 4

A mutual fund that seeks to achieve a high level of income and liquidity through investment in short-term money market instruments, such as T-bills, commercial paper, and short-term government bonds is __________________

Accepted Answer

A)  a balanced asset allocation fund
B)  a money market fund
C)  an equity or common stock fund
D)  a specialty fund
E)  an ethical fundF) B) and C)
G) B) and E)

Question 5

A mutual fund that aims for capital gains is:

Accepted Answer

A)  a balanced asset allocation fund
B)  a bond fund
C)  an equity or common stock fund
D)  a specialty fund
E)  an ethical fundF) B) and E)
G) A) and D)

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

What is step 4 of the common steps used by investors to evaluate mutual funds?

Accepted Answer

A)  Perform a financial checkup to make sure you are ready to invest.
B)  Obtain the money you need to purchase mutual funds.
C)  Determine your investment objectives.
D)  Find a fund with an objective that matches your objective.
E)  Evaluate, evaluate, and evaluate any mutual fund before buying or selling.F) A) and D)
G) None of the above

Question 8

The value of the mutual fund's portfolio minus the mutual fund's liabilities divided by the number of shares outstanding is called the:

Accepted Answer

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

Question 9

As a shareholder in a mutual fund, you should receive a(n)

Accepted Answer

A)  annual report.
B)  quarterly report.
C)  redemption fee sheet.
D)  letter from the president of the investment company that details what the fund's objectives are.
E)  copy of the annual mutual funds evaluation provided by Changing Times magazine.F) A) and C)
G) A) and E)

Question 10

A mutual fund that aims for long-term growth through capital appreciation and the reinvestment of income by investing in income producing real property is __________________

Accepted Answer

A)  a balanced asset allocation fund
B)  a money market fund
C)  an equity or common stock fund
D)  a real estate mutual fund
E)  an ethical fundF) B) and C)
G) All of the above

Question 11

What is not an disadvantage of investing in mutual funds?

Accepted Answer

A)  Diversification
B)  Professional management fees
C)  Inability to control capital gains
D)  Potential market risk
E)  Withdrawal costsF) All of the above
G) None of the above

Question 12

For a load fund, the average commission usually ranges between 1 and 3 percent of the purchase price for investments under $10,000.

Accepted Answer

A) True 
 B)False

Question 13

In a newspaper quotation, which of the following letters would indicate if a mutual fund has a front-end and a back-end fee?

Accepted Answer

A)  N
B)  R
C)  FR
D)  B
E)  It is impossible to tell if there is a front-end and a back-end fee by looking in the newspaper.F) A) and B)
G) A) and D)

Question 14

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a

Accepted Answer

A)  regular account.
B)  voluntary savings plan.
C)  contractual savings plan.
D)  minimum withdrawal plan.
E)  free contract plan.F) None of the above
G) A) and E)

Question 15

Which of these is not a true statement?

Accepted Answer

A)  ETFs can be purchased through a broker.
B)  ETFs can be purchased on margin.
C)  ETFs can be sold short.
D)  ETFs have lower management expenses than conventional mutual funds.
E)  ETFs cannot be purchased through a broker, on margin, sold short, and have lower management expenses than conventional mutual funds.F) A) and E)
G) B) and C)

Question 16

A mutual fund that seeks to make investment decisions that are guided by moral criteria that can vary from fund to fund is __________________

Accepted Answer

A)  a balanced asset allocation fund
B)  a money market fund
C)  an equity or common stock fund
D)  a real estate mutual fund
E)  an ethical fundF) B) and E)
G) A) and B)

Question 17

The management fee for most mutual funds ranges between ____________ percent.

Accepted Answer

A)  0.5 to 4
B)  1 to 2
C)  2 to 4
D)  5 to 6 1/2
E)  7 to 8 1/2F) C) and D)
G) B) and C)

Question 18

A no-load fund is a mutual fund in which no sales charge is paid by the individual investor to purchase shares.

Accepted Answer

A) True 
 B)False

Question 19

A redemption fee is a 1 to 6 percent charge that shareholders pay when they withdraw their investment from a mutual fund.

Accepted Answer

A) True 
 B)False

Question 20

If a mutual fund charges a front-end load of 3%, how much must the investor pay per unit if the NAVPS is $10.00?

Accepted Answer

A)  $9.70
B)  $10.00
C)  $10.16
D)  $10.31
E)  $13.00F) A) and E)
G) C) and E)

Exam 13: Investing in Mutual Funds

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

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As a shareholder in a mutual fund, you should receive a(n)

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A mutual fund that seeks to make investment decisions that are guided by moral criteria that can vary from fund to fund is __________________

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What type of fund seeks to aim for income and safety?

Correct AnswerverifiedShow Answer

The management fee for most mutual funds ranges between ____________ percent.

Correct AnswerverifiedShow Answer

A mutual fund that aims for long-term growth through capital appreciation and the reinvestment of income by investing in income producing real property is __________________

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Which of these is not a true statement?

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If a mutual fund charges a front-end load of 3%, how much must the investor pay per unit if the NAVPS is $10.00?

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A redemption fee is a 1 to 6 percent charge that shareholders pay when they withdraw their investment from a mutual fund.

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What is not an disadvantage of investing in mutual funds?

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The value of the mutual fund's portfolio minus the mutual fund's liabilities divided by the number of shares outstanding is called the:

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A mutual fund that seeks to achieve a high level of income and liquidity through investment in short-term money market instruments, such as T-bills, commercial paper, and short-term government bonds is __________________

Correct AnswerverifiedShow Answer

Another name for a mutual fund that charges a contingent deferred sales load is a(n) ____________ fund.

Correct AnswerverifiedShow Answer

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a

Correct AnswerverifiedShow Answer

A mutual fund that aims for capital gains is:

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What is step 4 of the common steps used by investors to evaluate mutual funds?

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In a newspaper quotation, which of the following letters would indicate if a mutual fund has a front-end and a back-end fee?

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What is not an advantage of investing in mutual funds?

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A no-load fund is a mutual fund in which no sales charge is paid by the individual investor to purchase shares.

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For a load fund, the average commission usually ranges between 1 and 3 percent of the purchase price for investments under $10,000.

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