Question 1

Discuss other issues that you would wish to address in your overall financial plan before investing in mutual funds.

Accepted Answer

You would wish to maintain ade

Question 2

You invested $1,000 in a mutual fund with a 4% load when the NAV was $20 per share. If you sell your shares at an NAV of $24 per share, what is the return on your investment?

Accepted Answer

A)  14.8% 
B)  15% 
C)  12.5% 
D)  10.8% 
A)  14.8% 
B)  15% 
C)  12.5% 
D)  10.8%

Question 3

Regarding load and no-load mutual funds,

Accepted Answer

A)  load funds usually outperform no-load funds. 
B)  no-load funds perform at least as well as load funds even when the fees are ignored. 
C)  the two types of funds perform about the same considering the fees. 
D)  load funds may be bought directly, whereas no-load funds must be purchased through a broker. 
A)  load funds usually outperform no-load funds. 
B)  no-load funds perform at least as well as load funds even when the fees are ignored. 
C)  the two types of funds perform about the same considering the fees. 
D)  load funds may be bought directly, whereas no-load funds must be purchased through a broker.

Question 4

Use the following two columns of items to answer the matching questions below:
-capital appreciation 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 5

Which of the following is not true of global and international bond funds?

Accepted Answer

A)  They may be subject to interest rate risk. 
B)  They may be subject to exchange rate risk. 
C)  Their expenses may be higher than those of domestic bond funds. 
D)  They are especially attractive to investors in high tax bracket. 
A)  They may be subject to interest rate risk. 
B)  They may be subject to exchange rate risk. 
C)  Their expenses may be higher than those of domestic bond funds. 
D)  They are especially attractive to investors in high tax bracket.

Question 6

Closed-end mutual funds have a limited number of shares that are sold when the funds are first created; the shares are then resold over the stock exchanges.

Accepted Answer

A) True 
 B)False

Question 7

Index mutual funds tend to have lower expenses than other types of mutual funds.

Accepted Answer

A) True 
 B)False

Question 8

An arrangement offered by some brokerage firms that enables investors to diversify among various mutual funds and receive summary statement information is called a

Accepted Answer

A)  mutual fund firm. 
B)  mutual fund security. 
C)  mutual fund supermarket. 
D)  mutual fund family. 
A)  mutual fund firm. 
B)  mutual fund security. 
C)  mutual fund supermarket. 
D)  mutual fund family.

Question 9

Capital gains from mutual funds can be received if the mutual fund makes a profit on the shares it sells or if an individual investor realizes a gain on the sale of mutual fund shares.

Accepted Answer

A) True 
 B)False

Question 10

Mutual funds that sell shares directly to investors and repurchase shares investors want to sell are called ________ funds.

Accepted Answer

A)  open-market 
B)  open-end 
C)  closed-end 
D)  fair value 
A)  open-market 
B)  open-end 
C)  closed-end 
D)  fair value

Question 11

On the average, actively managed mutual funds have an expense ratio of about

Accepted Answer

A)  1.25% 
B)  2.5%. 
C)  3%. 
D)  5%. 
A)  1.25% 
B)  2.5%. 
C)  3%. 
D)  5%.

Question 12

From the perspective of investors, the most important expense statistic mentioned in the prospectus of a mutual fund is the

Accepted Answer

A)  gross profit margin ratio. 
B)  expense ratio. 
C)  times interest earned ratio. 
D)  growth rate. 
A)  gross profit margin ratio. 
B)  expense ratio. 
C)  times interest earned ratio. 
D)  growth rate.

Question 13

Which of the following is not a characteristic of a closed-end mutual fund?

Accepted Answer

A)  Once the fund closes the shares of the fund trade on the stock market just like a stock. 
B)  The shares may sell above NAV on the secondary market. 
C)  Investors can easily sell their share back to the fund on a daily basis at NAV. 
D)  The shares may sell below NAV on the secondary market. 
A)  Once the fund closes the shares of the fund trade on the stock market just like a stock. 
B)  The shares may sell above NAV on the secondary market. 
C)  Investors can easily sell their share back to the fund on a daily basis at NAV. 
D)  The shares may sell below NAV on the secondary market.

Question 14

Index stock funds always contain the stock of every company in a particular index.

Accepted Answer

A) True 
 B)False

Question 15

In most cases, the fees charged by load funds go to stockbrokers or other financial advisers who execute transactions for investors.

Accepted Answer

A) True 
 B)False

Question 16

No-load mutual funds sell directly to investors and charge a somewhat smaller management fee than load funds.

Accepted Answer

A) True 
 B)False

Question 17

Investors can earn a return on an investment in a stock mutual fund in all of the following ways, except

Accepted Answer

A)  interest distributions. 
B)  dividend distributions. 
C)  capital gains distributions. 
D)  redeeming shares. 
A)  interest distributions. 
B)  dividend distributions. 
C)  capital gains distributions. 
D)  redeeming shares.

Question 18

Some index funds have relatively high expense ratios of 1.25% even though they are not actively managed.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is a stock mutual fund?

Accepted Answer

A)  Ginnie Mae fund 
B)  Growth fund 
C)  Municipal securities fund 
D)  Treasury securities fund 
A)  Ginnie Mae fund 
B)  Growth fund 
C)  Municipal securities fund 
D)  Treasury securities fund

Question 20

The component of expense ratios that includes a fee charged by some mutual funds to pay brokers is

Accepted Answer

A)  a management fee. 
B)  a 12b-1 fee. 
C)  an administrative expense. 
D)  a referral fee. 
A)  a management fee. 
B)  a 12b-1 fee. 
C)  an administrative expense. 
D)  a referral fee.

Discuss other issues that you would wish to address in your overall financial plan before investing in mutual funds.

You invested $1,000 in a mutual fund with a 4% load when the NAV was $20 per share. If you sell your shares at an NAV of $24 per share, what is the return on your investment?

Regarding load and no-load mutual funds,

Which of the following is not true of global and international bond funds?

Closed-end mutual funds have a limited number of shares that are sold when the funds are first created; the shares are then resold over the stock exchanges.

Index mutual funds tend to have lower expenses than other types of mutual funds.

An arrangement offered by some brokerage firms that enables investors to diversify among various mutual funds and receive summary statement information is called a

Capital gains from mutual funds can be received if the mutual fund makes a profit on the shares it sells or if an individual investor realizes a gain on the sale of mutual fund shares.

Mutual funds that sell shares directly to investors and repurchase shares investors want to sell are called ________ funds.

On the average, actively managed mutual funds have an expense ratio of about

From the perspective of investors, the most important expense statistic mentioned in the prospectus of a mutual fund is the

Which of the following is not a characteristic of a closed-end mutual fund?

Index stock funds always contain the stock of every company in a particular index.

In most cases, the fees charged by load funds go to stockbrokers or other financial advisers who execute transactions for investors.

No-load mutual funds sell directly to investors and charge a somewhat smaller management fee than load funds.

Investors can earn a return on an investment in a stock mutual fund in all of the following ways, except

Some index funds have relatively high expense ratios of 1.25% even though they are not actively managed.

Which of the following is a stock mutual fund?

The component of expense ratios that includes a fee charged by some mutual funds to pay brokers is

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

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Exam 17: Investing in Mutual Funds

Discuss other issues that you would wish to address in your overall financial plan before investing in mutual funds.

You invested $1,000 in a mutual fund with a 4% load when the NAV was $20 per share. If you sell your shares at an NAV of $24 per share, what is the return on your investment?

Regarding load and no-load mutual funds,

Which of the following is not true of global and international bond funds?

Closed-end mutual funds have a limited number of shares that are sold when the funds are first created; the shares are then resold over the stock exchanges.

Index mutual funds tend to have lower expenses than other types of mutual funds.

An arrangement offered by some brokerage firms that enables investors to diversify among various mutual funds and receive summary statement information is called a

Capital gains from mutual funds can be received if the mutual fund makes a profit on the shares it sells or if an individual investor realizes a gain on the sale of mutual fund shares.

Mutual funds that sell shares directly to investors and repurchase shares investors want to sell are called ________ funds.

On the average, actively managed mutual funds have an expense ratio of about

From the perspective of investors, the most important expense statistic mentioned in the prospectus of a mutual fund is the

Which of the following is not a characteristic of a closed-end mutual fund?

Index stock funds always contain the stock of every company in a particular index.

In most cases, the fees charged by load funds go to stockbrokers or other financial advisers who execute transactions for investors.

No-load mutual funds sell directly to investors and charge a somewhat smaller management fee than load funds.

Investors can earn a return on an investment in a stock mutual fund in all of the following ways, except

Some index funds have relatively high expense ratios of 1.25% even though they are not actively managed.

Which of the following is a stock mutual fund?

The component of expense ratios that includes a fee charged by some mutual funds to pay brokers is

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