Question 1

Tax information for mutual funds is reported as part of the year-end statement and on an IRS Form 1099 DIV.

Accepted Answer

A) True 
 B)False  True

Question 2

Investors in closed-end funds,exchange-traded funds,and open-end funds can make money by purchasing shares at a low price and then selling them at a higher price.

Accepted Answer

A) True 
 B)False  True

Question 3

Martin Campbell wants to invest in mutual funds,but is also worried about diversification.Which fund would you recommend to him?

Accepted Answer

A) Income fund 
B) Long-term corporate bond fund 
C) U)S.government bond fund 
D) Midcap fund 
E) A fund of funds 
A) Income fund 
B) Long-term corporate bond fund 
C) U)S.government bond fund 
D) Midcap fund 
E) A fund of funds E

Question 4

When you invest in Class A shares,you pay a sales charge when you sell your mutual fund shares.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an example of an exchange-traded fund (commonly referred to as ETF)that is available to track an index?

Accepted Answer

A) Midcap stocks 
B) Small cap stocks 
C) Fixed-income securities 
D) Commodities 
E) All of these are correct 
A) Midcap stocks 
B) Small cap stocks 
C) Fixed-income securities 
D) Commodities 
E) All of these are correct

Question 6

A mutual fund:

Accepted Answer

A) is a way of investing in a single stock. 
B) offers safety through diversification because a loss in one investment is usually offset by gains in other investments within the fund. 
C) is insured by the FDIC. 
D) is not an investment that is increasing in popularity. 
E) is professionally managed so investors need not monitor fund results. 
A) is a way of investing in a single stock. 
B) offers safety through diversification because a loss in one investment is usually offset by gains in other investments within the fund. 
C) is insured by the FDIC. 
D) is not an investment that is increasing in popularity. 
E) is professionally managed so investors need not monitor fund results.

Question 7

Typically,you must invest at least $15,000 to open a mutual fund account.

Accepted Answer

A) True 
 B)False

Question 8

Louise Prescott is buying shares in a mutual fund that invests in larger,well-established companies that are expecting higher-than-average revenues and earnings growth.What type of mutual fund is she buying?

Accepted Answer

A) Socially responsible fund 
B) Sector fund 
C) Small cap fund 
D) Index fund 
E) Growth fund 
A) Socially responsible fund 
B) Sector fund 
C) Small cap fund 
D) Index fund 
E) Growth fund

Question 9

Income dividends and capital gain distributions are:

Accepted Answer

A) exempt from taxation. 
B) subject to federal taxation. 
C) subject to federal taxation after the first $1,000. 
D) subject to federal taxation after the first $5,000. 
E) subject to federal taxation after the first $10,000. 
A) exempt from taxation. 
B) subject to federal taxation. 
C) subject to federal taxation after the first $1,000. 
D) subject to federal taxation after the first $5,000. 
E) subject to federal taxation after the first $10,000.

Question 10

Which one of the following statements is true?

Accepted Answer

A) Most mutual funds are managed funds. 
B) How long the present fund manager has been managing the fund is irrelevant. 
C) You should ignore fees when comparing mutual funds. 
D) Managed funds are usually index funds. 
E) A team of managers is always better than a single fund manager. 
A) Most mutual funds are managed funds. 
B) How long the present fund manager has been managing the fund is irrelevant. 
C) You should ignore fees when comparing mutual funds. 
D) Managed funds are usually index funds. 
E) A team of managers is always better than a single fund manager.

Question 11

The Capitalist Mutual Fund's net asset value is $25.The fund has liabilities of $2.5 million and 1,500,000 shares have been issued.What is the value of the fund's portfolio?

Accepted Answer

A) $25 million 
B) $40 million 
C) $50 million 
D) $37 million 
E) $15 million 
A) $25 million 
B) $40 million 
C) $50 million 
D) $37 million 
E) $15 million

Question 12

Investors in an open-end fund are free to buy and sell shares at the net asset value.

Accepted Answer

A) True 
 B)False

Question 13

For most mutual funds,the net asset value is calculated at the close of trading each:

Accepted Answer

A) year. 
B) quarter. 
C) week. 
D) day. 
E) hour. 
A) year. 
B) quarter. 
C) week. 
D) day. 
E) hour.

Question 14

A mutual fund that invests in stocks issued by companies with a long history of paying dividends is called a(n)________ fund.

Accepted Answer

A) balanced 
B) equity income 
C) industry 
D) sector 
E) money market 
A) balanced 
B) equity income 
C) industry 
D) sector 
E) money market

Question 15

The current market 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,results in the:

Accepted Answer

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

Question 16

Sloan Richards is buying shares in a mutual fund that invests in companies with a total capitalization of less than $2 billion.What type of mutual fund is this?

Accepted Answer

A) Socially responsible fund 
B) Sector fund 
C) Small cap fund 
D) Index fund 
E) Growth fund 
A) Socially responsible fund 
B) Sector fund 
C) Small cap fund 
D) Index fund 
E) Growth fund

Question 17

Which of the following would be found in a mutual fund's prospectus?

Accepted Answer

A) Statement describing the risk factors associated with the fund 
B) Description of the fund's past performance 
C) Information about the fund's management 
D) The process for buying and selling shares in the fund 
E) All of these would be found in a prospectus. 
A) Statement describing the risk factors associated with the fund 
B) Description of the fund's past performance 
C) Information about the fund's management 
D) The process for buying and selling shares in the fund 
E) All of these would be found in a prospectus.

Question 18

A mutual fund whose shares are issued and redeemed by the investment company at the request of investors is called a ________ fund.

Accepted Answer

A) closed-end 
B) open-end 
C) load 
D) no-load 
E) convertible 
A) closed-end 
B) open-end 
C) load 
D) no-load 
E) convertible

Question 19

Marcie is seeking interest income for two years but wants to ensure that her investment is as safe as possible.Which type of mutual fund best fits her requirements?

Accepted Answer

A) Junk bond fund 
B) Intermediate corporate bond fund 
C) Growth fund 
D) Short-term government bond fund 
E) World bond fund 
A) Junk bond fund 
B) Intermediate corporate bond fund 
C) Growth fund 
D) Short-term government bond fund 
E) World bond fund

Question 20

Which of the following is not an advantage of investing in mutual funds?

Accepted Answer

A) Ease of buying and selling shares 
B) Ongoing management fees and 12b-1 fees 
C) Professional management 
D) Diversification 
E) Multiple withdrawal options 
A) Ease of buying and selling shares 
B) Ongoing management fees and 12b-1 fees 
C) Professional management 
D) Diversification 
E) Multiple withdrawal options

Tax information for mutual funds is reported as part of the year-end statement and on an IRS Form 1099 DIV.

Investors in closed-end funds,exchange-traded funds,and open-end funds can make money by purchasing shares at a low price and then selling them at a higher price.

Martin Campbell wants to invest in mutual funds,but is also worried about diversification.Which fund would you recommend to him?

When you invest in Class A shares,you pay a sales charge when you sell your mutual fund shares.

Which of the following is an example of an exchange-traded fund (commonly referred to as ETF)that is available to track an index?

A mutual fund:

Typically,you must invest at least $15,000 to open a mutual fund account.

Louise Prescott is buying shares in a mutual fund that invests in larger,well-established companies that are expecting higher-than-average revenues and earnings growth.What type of mutual fund is she buying?

Income dividends and capital gain distributions are:

Which one of the following statements is true?

The Capitalist Mutual Fund's net asset value is $25.The fund has liabilities of $2.5 million and 1,500,000 shares have been issued.What is the value of the fund's portfolio?

Investors in an open-end fund are free to buy and sell shares at the net asset value.

For most mutual funds,the net asset value is calculated at the close of trading each:

A mutual fund that invests in stocks issued by companies with a long history of paying dividends is called a(n)________ fund.

The current market 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,results in the:

Sloan Richards is buying shares in a mutual fund that invests in companies with a total capitalization of less than $2 billion.What type of mutual fund is this?

Which of the following would be found in a mutual fund's prospectus?

A mutual fund whose shares are issued and redeemed by the investment company at the request of investors is called a ________ fund.

Marcie is seeking interest income for two years but wants to ensure that her investment is as safe as possible.Which type of mutual fund best fits her requirements?

Which of the following is not an advantage of investing in mutual funds?

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: the Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health,disability,and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters

Exam 16: Investing in Mutual Funds

Tax information for mutual funds is reported as part of the year-end statement and on an IRS Form 1099 DIV.

Investors in closed-end funds,exchange-traded funds,and open-end funds can make money by purchasing shares at a low price and then selling them at a higher price.

Martin Campbell wants to invest in mutual funds,but is also worried about diversification.Which fund would you recommend to him?

When you invest in Class A shares,you pay a sales charge when you sell your mutual fund shares.

Which of the following is an example of an exchange-traded fund (commonly referred to as ETF)that is available to track an index?

A mutual fund:

Typically,you must invest at least $15,000 to open a mutual fund account.

Louise Prescott is buying shares in a mutual fund that invests in larger,well-established companies that are expecting higher-than-average revenues and earnings growth.What type of mutual fund is she buying?

Income dividends and capital gain distributions are:

Which one of the following statements is true?

The Capitalist Mutual Fund's net asset value is $25.The fund has liabilities of $2.5 million and 1,500,000 shares have been issued.What is the value of the fund's portfolio?

Investors in an open-end fund are free to buy and sell shares at the net asset value.

For most mutual funds,the net asset value is calculated at the close of trading each:

A mutual fund that invests in stocks issued by companies with a long history of paying dividends is called a(n)________ fund.

The current market 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,results in the:

Sloan Richards is buying shares in a mutual fund that invests in companies with a total capitalization of less than $2 billion.What type of mutual fund is this?

Which of the following would be found in a mutual fund's prospectus?

A mutual fund whose shares are issued and redeemed by the investment company at the request of investors is called a ________ fund.

Marcie is seeking interest income for two years but wants to ensure that her investment is as safe as possible.Which type of mutual fund best fits her requirements?

Which of the following is not an advantage of investing in mutual funds?

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: the Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health,disability,and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters