Question 1

In calculating the net asset value (NAV), which of the following is true?

Accepted Answer

A)  Dividends are subtracted and expenses added. 
B)  Interest is subtracted and expenses are added. 
C)  Dividends are added and expenses are subtracted. 
D)  Interest and other expenses are not included. 
A)  Dividends are subtracted and expenses added. 
B)  Interest is subtracted and expenses are added. 
C)  Dividends are added and expenses are subtracted. 
D)  Interest and other expenses are not included.

Question 2

A ________ mutual fund is a good investment for "rainy day" funds, while a ________ mutual fund is a good type of investment for funds earmarked for retirement in 25 years.

Accepted Answer

A)  municipal bond; corporate income 
B)  money market; global growth 
C)  diverse equity; money market 
D)  short-term junk bond; long-term junk bond 
A)  municipal bond; corporate income 
B)  money market; global growth 
C)  diverse equity; money market 
D)  short-term junk bond; long-term junk bond

Question 3

An investor who wants to invest in a particular sector but does not have strong opinions about which stocks to purchase within that sector would be likely to choose a(n)

Accepted Answer

A)  balanced growth and income fund. 
B)  mid-cap fund. 
C)  exchange-traded fund that represents that particular sector. 
D)  growth fund. 
A)  balanced growth and income fund. 
B)  mid-cap fund. 
C)  exchange-traded fund that represents that particular sector. 
D)  growth fund.

Question 4

Open-end mutual fund companies sell directly to investors and repurchase shares whenever investors wish to sell them.

Accepted Answer

A) True 
 B)False

Question 5

The difference between an international and a global fund is

Accepted Answer

A)  global funds invest in both U.S. firms and those of other countries whereas international funds focus on firms outside the United States. 
B)  international funds invest in U.S. firms and those of other counties while global funds invest only in foreign firms. 
C)  international funds invest in Treasury securities but no U.S. firms while global funds invest in both. 
D)  There is no difference except in name. 
A)  global funds invest in both U.S. firms and those of other countries whereas international funds focus on firms outside the United States. 
B)  international funds invest in U.S. firms and those of other counties while global funds invest only in foreign firms. 
C)  international funds invest in Treasury securities but no U.S. firms while global funds invest in both. 
D)  There is no difference except in name.

Question 6

Even bond mutual funds with little or no default risk have interest rate risk.

Accepted Answer

A) True 
 B)False

Question 7

A(n) ________ is a document that provides financial information about a mutual fund, including expenses and past performance.

Accepted Answer

A)  annual report 
B)  prospectus 
C)  financial statement 
D)  balance sheet 
A)  annual report 
B)  prospectus 
C)  financial statement 
D)  balance sheet

Question 8

Use the following two columns of items to answer the matching questions below:
-equity income funds
A)funds that sell shares to individuals and invest the proceeds in bonds
B)mutual funds that focus on firms that pay a high level of dividends
C)mutual funds that focus on a specific industry
D)mutual funds that contain both growth stocks and stocks that pay dividends
E)mutual funds that focus on stocks that are expected to grow at a very high rate

Accepted Answer

The answer of Use the following two columns of items...

Question 9

Which of the following is not a source of profits for owners of a stock mutual fund?

Accepted Answer

A)  Dividends distributed by the mutual fund 
B)  Interest distributed by the mutual fund 
C)  Capital gains distributed by the mutual fund 
D)  Capital gains from the sale of their shares in the mutual fund 
A)  Dividends distributed by the mutual fund 
B)  Interest distributed by the mutual fund 
C)  Capital gains distributed by the mutual fund 
D)  Capital gains from the sale of their shares in the mutual fund

Question 10

Arrange the following five stock funds in order from the highest risk to the lowest: index fund, capital appreciation fund, technology sector fund, income fund, growth stock fund.

Accepted Answer

technology sector fu

Question 11

Studies on mutual funds have found that load funds perform better than no-load funds.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following expenses is usually the highest for a mutual fund?

Accepted Answer

A)  Management fees 
B)  Administrative fees 
C)  12b-1 fees 
D)  Referral fees 
A)  Management fees 
B)  Administrative fees 
C)  12b-1 fees 
D)  Referral fees

Question 13

Stocks that performed well in one quarter will not necessarily perform well in another quarter.

Accepted Answer

A) True 
 B)False

Question 14

In order to maximize diversification, it is a good idea to

Accepted Answer

A)  invest in large-, mid- and small-cap domestic mutual funds. 
B)  invest in high-quality global bond mutual funds. 
C)  invest in international equity mutual funds. 
D)  invest in all funds mentioned in A, B and C. 
A)  invest in large-, mid- and small-cap domestic mutual funds. 
B)  invest in high-quality global bond mutual funds. 
C)  invest in international equity mutual funds. 
D)  invest in all funds mentioned in A, B and C.

Question 15

Which of the following funds would probably have the highest potential risk and return?

Accepted Answer

A)  Index funds representing the entire stock market 
B)  Capital appreciation funds 
C)  Equity income funds 
D)  Balanced growth and income funds 
A)  Index funds representing the entire stock market 
B)  Capital appreciation funds 
C)  Equity income funds 
D)  Balanced growth and income funds

Question 16

The difference between stock mutual funds and bond mutual funds lies in the percentage of stocks and bonds that each fund purchases.

Accepted Answer

A) True 
 B)False

Question 17

A mutual fund has a beginning balance of $100 million, earns interest of $10 million, receives dividends of $15 million, and has expenses of $5 million. If 10 million shares are outstanding, what is the NAV?

Accepted Answer

A)  $10.50 
B)  $11.00 
C)  $12.00 
D)  $12.50 
A)  $10.50 
B)  $11.00 
C)  $12.00 
D)  $12.50

Question 18

When evaluating a mutual fund prior to deciding to invest, you should consider

Accepted Answer

A)  the breadth of the stocks in which the fund is investing. 
B)  the industry or industries in which the fund is investing. 
C)  performance through the financial crisis in 2008-2010. 
D)  factors in both A and B, above. 
A)  the breadth of the stocks in which the fund is investing. 
B)  the industry or industries in which the fund is investing. 
C)  performance through the financial crisis in 2008-2010. 
D)  factors in both A and B, above.

Question 19

Treasury bond funds with short maturities have ________ default risk and ________ interest rate risk.

Accepted Answer

A)  high; low 
B)  high; high 
C)  limited; high 
D)  low; limited 
A)  high; low 
B)  high; high 
C)  limited; high 
D)  low; limited

Question 20

A mutual fund must distribute ________ to investors in the same year as earned.

Accepted Answer

A)  dividends 
B)  profits 
C)  capital gains 
D)  Both A and C are correct. 
A)  dividends 
B)  profits 
C)  capital gains 
D)  Both A and C are correct.

In calculating the net asset value (NAV), which of the following is true?

A mutual fund is a good investment for "rainy day" funds, while a mutual fund is a good type of investment for funds earmarked for retirement in 25 years.

An investor who wants to invest in a particular sector but does not have strong opinions about which stocks to purchase within that sector would be likely to choose a(n)

Open-end mutual fund companies sell directly to investors and repurchase shares whenever investors wish to sell them.

The difference between an international and a global fund is

Even bond mutual funds with little or no default risk have interest rate risk.

A(n) ________ is a document that provides financial information about a mutual fund, including expenses and past performance.

Which of the following is not a source of profits for owners of a stock mutual fund?

Arrange the following five stock funds in order from the highest risk to the lowest: index fund, capital appreciation fund, technology sector fund, income fund, growth stock fund.

Studies on mutual funds have found that load funds perform better than no-load funds.

Which of the following expenses is usually the highest for a mutual fund?

Stocks that performed well in one quarter will not necessarily perform well in another quarter.

In order to maximize diversification, it is a good idea to

Which of the following funds would probably have the highest potential risk and return?

The difference between stock mutual funds and bond mutual funds lies in the percentage of stocks and bonds that each fund purchases.

A mutual fund has a beginning balance of $100 million, earns interest of $10 million, receives dividends of $15 million, and has expenses of $5 million. If 10 million shares are outstanding, what is the NAV?

When evaluating a mutual fund prior to deciding to invest, you should consider

Treasury bond funds with short maturities have default risk and interest rate risk.

A mutual fund must distribute ________ to investors in the same year as earned.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Exam 17: Investing in Mutual Funds

In calculating the net asset value (NAV), which of the following is true?

A ________ mutual fund is a good investment for "rainy day" funds, while a ________ mutual fund is a good type of investment for funds earmarked for retirement in 25 years.

An investor who wants to invest in a particular sector but does not have strong opinions about which stocks to purchase within that sector would be likely to choose a(n)

Open-end mutual fund companies sell directly to investors and repurchase shares whenever investors wish to sell them.

The difference between an international and a global fund is

Even bond mutual funds with little or no default risk have interest rate risk.

A(n) ________ is a document that provides financial information about a mutual fund, including expenses and past performance.

Which of the following is not a source of profits for owners of a stock mutual fund?

Arrange the following five stock funds in order from the highest risk to the lowest: index fund, capital appreciation fund, technology sector fund, income fund, growth stock fund.

Studies on mutual funds have found that load funds perform better than no-load funds.

Which of the following expenses is usually the highest for a mutual fund?

Stocks that performed well in one quarter will not necessarily perform well in another quarter.

In order to maximize diversification, it is a good idea to

Which of the following funds would probably have the highest potential risk and return?

The difference between stock mutual funds and bond mutual funds lies in the percentage of stocks and bonds that each fund purchases.

A mutual fund has a beginning balance of $100 million, earns interest of $10 million, receives dividends of $15 million, and has expenses of $5 million. If 10 million shares are outstanding, what is the NAV?

When evaluating a mutual fund prior to deciding to invest, you should consider

Treasury bond funds with short maturities have ________ default risk and ________ interest rate risk.

A mutual fund must distribute ________ to investors in the same year as earned.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

A mutual fund is a good investment for "rainy day" funds, while a mutual fund is a good type of investment for funds earmarked for retirement in 25 years.

Treasury bond funds with short maturities have default risk and interest rate risk.