Question 1

Before investing in a mutual fund, you should request and evaluate the fund's prospectus, which is available for a small charge.

Accepted Answer

A) True 
 B)False

Question 2

Index funds offer tax advantages because they ________ in much trading and, therefore, ________ capital gains.

Accepted Answer

A)  engage; generate 
B)  do not engage; generate 
C)  engage; do not generate 
D)  do not engage; do not generate 
A)  engage; generate 
B)  do not engage; generate 
C)  engage; do not generate 
D)  do not engage; do not generate

Question 3

Index funds are popular for all of the following reasons, except

Accepted Answer

A)  their performance relative to other mutual funds. 
B)  they incur low expenses. 
C)  they are not actively managed. 
D)  performance is frequently lower than that of actively managed portfolios. 
A)  their performance relative to other mutual funds. 
B)  they incur low expenses. 
C)  they are not actively managed. 
D)  performance is frequently lower than that of actively managed portfolios.

Question 4

While not all mutual funds have loads or commissions, they all have management fees and expenses that are charged to the mutual fund shareholders.

Accepted Answer

A) True 
 B)False

Question 5

________ mutual funds invest in both foreign bonds and U.S. bonds.

Accepted Answer

A)  International bond 
B)  Index 
C)  Treasury bond 
D)  Global bond 
A)  International bond 
B)  Index 
C)  Treasury bond 
D)  Global bond

Question 6

If a mutual fund's NAV is $50 and its expense ratio is 2%, what are the total expenses per share?

Accepted Answer

A)  $2 
B)  $10 
C)  $1 
D)  $5 
A)  $2 
B)  $10 
C)  $1 
D)  $5

Question 7

The ________ is the market value of the securities that a mutual fund has purchased minus any liabilities.

Accepted Answer

A)  book value 
B)  net asset value 
C)  gross asset value 
D)  net worth value 
A)  book value 
B)  net asset value 
C)  gross asset value 
D)  net worth value

Question 8

Corporate bond funds focus on bonds issued by high-quality firms and, therefore, tend to have a low degree of default risk.

Accepted Answer

A) True 
 B)False

Question 9

Mutual funds that receive dividends and capital gains must distribute these to investors in the same year.

Accepted Answer

A) True 
 B)False

Question 10

How much money would you need to purchase 400 shares of a mutual fund with an NAV of $55 per share and a 3% load?

Accepted Answer

A)  $22,000 
B)  $21,450 
C)  $23,200 
D)  $22,680 
A)  $22,000 
B)  $21,450 
C)  $23,200 
D)  $22,680

Question 11

When the global financial forecast calls for recession in China and Europe, you should consider investing in

Accepted Answer

A)  a global fund. 
B)  an international fund. 
C)  a domestic large cap fund. 
D)  a global bond fund. 
A)  a global fund. 
B)  an international fund. 
C)  a domestic large cap fund. 
D)  a global bond fund.

Question 12

An advantage of investing in mutual funds is that they all have the objective of preserving capital.

Accepted Answer

A) True 
 B)False

Question 13

A mutual fund that does not charge investors a fee and sells direct to investors is a(n) ________ mutual fund.

Accepted Answer

The answer of A mutual fund that does not charge...

Question 14

Stock brokers typically do not recommend no-load funds because

Accepted Answer

A)  the return is lower than on load funds and brokers want to sell only the best funds to their clients. 
B)  federal law prohibits brokers from selling no-load funds. 
C)  no-load funds do not pay an upfront fee to the broker for selling them. 
D)  there is no secondary market for them. 
A)  the return is lower than on load funds and brokers want to sell only the best funds to their clients. 
B)  federal law prohibits brokers from selling no-load funds. 
C)  no-load funds do not pay an upfront fee to the broker for selling them. 
D)  there is no secondary market for them.

Question 15

A breakdown of the fees and expenses of a mutual fund is not one of the items addressed in a prospectus.

Accepted Answer

A) True 
 B)False

Question 16

Advantages of ETFs versus stock index mutual funds are

Accepted Answer

A)  lower management fees. 
B)  major ETFs are more liquid. 
C)  lower risk. 
D)  A and B are correct. 
A)  lower management fees. 
B)  major ETFs are more liquid. 
C)  lower risk. 
D)  A and B are correct.

Question 17

If you are investing for the "long term" and are interested in capital appreciation and comfortable with increased risk levels, you should consider a(n) ________ or a(n) ________.

Accepted Answer

A)  global bond fund; international bond fund 
B)  growth fund; small cap fund 
C)  international index fund; global index fund 
D)  junk bond fund; domestic equity income fund 
A)  global bond fund; international bond fund 
B)  growth fund; small cap fund 
C)  international index fund; global index fund 
D)  junk bond fund; domestic equity income fund

Question 18

When an investment company offers several different mutual funds, its name is printed in bold in the listings in financial newspapers, but individual funds are not listed.

Accepted Answer

A) True 
 B)False

Question 19

There is no limit on the number of open-end mutual fund shares that a company can offer.

Accepted Answer

A) True 
 B)False

Question 20

The price of shares in a mutual fund is referred to as the ________.

Accepted Answer

The answer of The price of shares in a mutual...

Exam 17: Investing in Mutual Funds

Before investing in a mutual fund, you should request and evaluate the fund's prospectus, which is available for a small charge.

Index funds offer tax advantages because they ________ in much trading and, therefore, ________ capital gains.

Index funds are popular for all of the following reasons, except

While not all mutual funds have loads or commissions, they all have management fees and expenses that are charged to the mutual fund shareholders.

________ mutual funds invest in both foreign bonds and U.S. bonds.

If a mutual fund's NAV is $50 and its expense ratio is 2%, what are the total expenses per share?

The ________ is the market value of the securities that a mutual fund has purchased minus any liabilities.

Corporate bond funds focus on bonds issued by high-quality firms and, therefore, tend to have a low degree of default risk.

Mutual funds that receive dividends and capital gains must distribute these to investors in the same year.

How much money would you need to purchase 400 shares of a mutual fund with an NAV of $55 per share and a 3% load?

When the global financial forecast calls for recession in China and Europe, you should consider investing in

An advantage of investing in mutual funds is that they all have the objective of preserving capital.

A mutual fund that does not charge investors a fee and sells direct to investors is a(n) ________ mutual fund.

Stock brokers typically do not recommend no-load funds because

A breakdown of the fees and expenses of a mutual fund is not one of the items addressed in a prospectus.

Advantages of ETFs versus stock index mutual funds are

If you are investing for the "long term" and are interested in capital appreciation and comfortable with increased risk levels, you should consider a(n) ________ or a(n) ________.

When an investment company offers several different mutual funds, its name is printed in bold in the listings in financial newspapers, but individual funds are not listed.

There is no limit on the number of open-end mutual fund shares that a company can offer.

The price of shares in a mutual fund is referred to as the ________.

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

Index funds offer tax advantages because they in much trading and, therefore, capital gains.

If you are investing for the "long term" and are interested in capital appreciation and comfortable with increased risk levels, you should consider a(n) or a(n) .