Question 1

Dividend income, capital gains distributions, and changes in the fund's share price are all sources of returns for a mutual fund investor.

Accepted Answer

A) True 
 B)False

Question 2

A(n)_____ is a service offered by mutual funds that helps an investor earn compound interest on their investments.

Accepted Answer

A) retirement plan 
B) deferred withdrawal plan 
C) automatic reinvestment plan 
D) conversion privilege 
E) systemic withdrawal plan 
A) retirement plan 
B) deferred withdrawal plan 
C) automatic reinvestment plan 
D) conversion privilege 
E) systemic withdrawal plan

Question 3

A fund's objective is stated in its prospectus.

Accepted Answer

A) True 
 B)False

Question 4

The individual manager of a mutual fund has little to do with the fund's success.

Accepted Answer

A) True 
 B)False

Question 5

The current market value of all the securities a mutual fund owns, less any liabilities, on a per-share basis is known as the fund's:

Accepted Answer

A) compounded value. 
B) par value. 
C) net asset value. 
D) book value. 
E) liquidation value. 
A) compounded value. 
B) par value. 
C) net asset value. 
D) book value. 
E) liquidation value.

Question 6

_____ gives the property owner an allowance for the decline in the physical condition of real estate over time.

Accepted Answer

A) Depreciation 
B) A capital gain 
C) A dividend 
D) Interest 
E) Leverage 
A) Depreciation 
B) A capital gain 
C) A dividend 
D) Interest 
E) Leverage

Question 7

An annual fee charged by some mutual funds to cover promotion and selling expenses is called the:

Accepted Answer

A) management fee. 
B) back-end load fee. 
C) transaction fee. 
D) 12b-1 fee. 
E) low-load fee. 
A) management fee. 
B) back-end load fee. 
C) transaction fee. 
D) 12b-1 fee. 
E) low-load fee.

Question 8

A general-purpose money fund:

Accepted Answer

A) invests in virtually any type of money market investment vehicle. 
B) limits its investments to short-term, tax-exempt municipal securities. 
C) limits its investments to short-term securities of the U.S. government and its agencies. 
D) invests in stock of undervalued companies. 
E) limits its investments to real estate properties. 
A) invests in virtually any type of money market investment vehicle. 
B) limits its investments to short-term, tax-exempt municipal securities. 
C) limits its investments to short-term securities of the U.S. government and its agencies. 
D) invests in stock of undervalued companies. 
E) limits its investments to real estate properties.

Question 9

A(n)_____ sells fund shares either directly to the public or through authorized dealers.

Accepted Answer

A) investment advisor 
B) custodian 
C) transfer agent 
D) distributor 
E) money manager 
A) investment advisor 
B) custodian 
C) transfer agent 
D) distributor 
E) money manager

Question 10

Having money taken at regular intervals from your paycheck and put into a mutual fund is an example of a(n):

Accepted Answer

A) automatic investment plan. 
B) authorized deduction plan. 
C) systematic withdrawal plan. 
D) conversion privilege. 
E) index plan. 
A) automatic investment plan. 
B) authorized deduction plan. 
C) systematic withdrawal plan. 
D) conversion privilege. 
E) index plan.

Question 11

All income from mutual funds that are not held in tax-deferred accounts is taxed at identical tax rates.

Accepted Answer

A) True 
 B)False

Question 12

Leverage means:

Accepted Answer

A) using borrowed money to magnify returns. 
B) paying only cash for any investment purchase. 
C) investing in highly speculative securities. 
D) purchasing securities at a premium price. 
E) selling investments before their maturity. 
A) using borrowed money to magnify returns. 
B) paying only cash for any investment purchase. 
C) investing in highly speculative securities. 
D) purchasing securities at a premium price. 
E) selling investments before their maturity.

Question 13

Which of the following is a reason to invest in mutual funds?

Accepted Answer

A) Mutual funds are free of any hidden costs. 
B) Mutual funds earn tax-free returns. 
C) Mutual funds provide a guaranteed return in spite of market risks. 
D) Mutual funds provide diversification of invested funds. 
E) Mutual funds do not charge any fees. 
A) Mutual funds are free of any hidden costs. 
B) Mutual funds earn tax-free returns. 
C) Mutual funds provide a guaranteed return in spite of market risks. 
D) Mutual funds provide diversification of invested funds. 
E) Mutual funds do not charge any fees.

Question 14

Mike has decided to purchase a real estate property that is expected to generate a net operating income (NOI)of $63,000 per year. With a 9% cap rate, the property would have an estimated value of:

Accepted Answer

A) $630,000. 
B) $187,000. 
C) $700,000. 
D) $965,000. 
E) $235,000. 
A) $630,000. 
B) $187,000. 
C) $700,000. 
D) $965,000. 
E) $235,000.

Question 15

Purchasing raw land as an investment is highly risky.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following bond mutual funds invest in tax-exempt securities?

Accepted Answer

A) High-yield corporate bond funds 
B) Municipal bond funds 
C) Convertible bond funds 
D) Mortgage-backed bond funds 
E) Intermediate-term bond funds 
A) High-yield corporate bond funds 
B) Municipal bond funds 
C) Convertible bond funds 
D) Mortgage-backed bond funds 
E) Intermediate-term bond funds

Question 17

Jenny's adjusted gross income is $120,000 a year and she owns real estate property that generates a rental income of $10,000 annually. If she pays mortgage interest of $4,000 on her property per year, she can write off up to  _____ in depreciation.

Accepted Answer

A) $4,000 
B) $10,000 
C) $6,000 
D) $14,000 
E) $8,000 
A) $4,000 
B) $10,000 
C) $6,000 
D) $14,000 
E) $8,000

Question 18

Exchange traded mutual funds (ETFs):

Accepted Answer

A) are traded throughout the day on stock exchanges. 
B) are closed-end funds with a fixed number of shares outstanding. 
C) always distribute their capital gains to fund holders, resulting in low taxes. 
D) are actively managed by investors, resulting in high costs and high taxes. 
E) fill their buy and sell orders at the closing prices at the end of the trading day. 
A) are traded throughout the day on stock exchanges. 
B) are closed-end funds with a fixed number of shares outstanding. 
C) always distribute their capital gains to fund holders, resulting in low taxes. 
D) are actively managed by investors, resulting in high costs and high taxes. 
E) fill their buy and sell orders at the closing prices at the end of the trading day.

Question 19

Which of the following combines some of the operating characteristics of an open-end fund with some of the trading characteristics of a closed-end fund?

Accepted Answer

A) Preferred fund 
B) Common fund 
C) Exchange traded fund 
D) Net asset fund 
E) Unit investment fund 
A) Preferred fund 
B) Common fund 
C) Exchange traded fund 
D) Net asset fund 
E) Unit investment fund

Question 20

Compared to mutual funds, exchange traded funds (ETFs):

Accepted Answer

A) are more cost-effective for investors with a short-term horizon. 
B) generate higher taxable gains. 
C) accommodate investors pursuing narrow market segments. 
D) are more diversified. 
E) have higher overhead expenses. 
A) are more cost-effective for investors with a short-term horizon. 
B) generate higher taxable gains. 
C) accommodate investors pursuing narrow market segments. 
D) are more diversified. 
E) have higher overhead expenses.

Dividend income, capital gains distributions, and changes in the fund's share price are all sources of returns for a mutual fund investor.

A(n)_____ is a service offered by mutual funds that helps an investor earn compound interest on their investments.

A fund's objective is stated in its prospectus.

The individual manager of a mutual fund has little to do with the fund's success.

The current market value of all the securities a mutual fund owns, less any liabilities, on a per-share basis is known as the fund's:

_____ gives the property owner an allowance for the decline in the physical condition of real estate over time.

An annual fee charged by some mutual funds to cover promotion and selling expenses is called the:

A general-purpose money fund:

A(n)_____ sells fund shares either directly to the public or through authorized dealers.

Having money taken at regular intervals from your paycheck and put into a mutual fund is an example of a(n):

All income from mutual funds that are not held in tax-deferred accounts is taxed at identical tax rates.

Leverage means:

Which of the following is a reason to invest in mutual funds?

Mike has decided to purchase a real estate property that is expected to generate a net operating income (NOI)of $63,000 per year. With a 9% cap rate, the property would have an estimated value of:

Purchasing raw land as an investment is highly risky.

Which of the following bond mutual funds invest in tax-exempt securities?

Jenny's adjusted gross income is $120,000 a year and she owns real estate property that generates a rental income of $10,000 annually. If she pays mortgage interest of $4,000 on her property per year, she can write off up to _____ in depreciation.

Exchange traded mutual funds (ETFs):

Which of the following combines some of the operating characteristics of an open-end fund with some of the trading characteristics of a closed-end fund?

Compared to mutual funds, exchange traded funds (ETFs):

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Planning for Retirement

Preserving Your Estate

Filters

Exam 13: Investing in Mutual Funds, Etfs, and Real Estate

Dividend income, capital gains distributions, and changes in the fund's share price are all sources of returns for a mutual fund investor.

A(n)_____ is a service offered by mutual funds that helps an investor earn compound interest on their investments.

A fund's objective is stated in its prospectus.

The individual manager of a mutual fund has little to do with the fund's success.

The current market value of all the securities a mutual fund owns, less any liabilities, on a per-share basis is known as the fund's:

_____ gives the property owner an allowance for the decline in the physical condition of real estate over time.

An annual fee charged by some mutual funds to cover promotion and selling expenses is called the:

A general-purpose money fund:

A(n)_____ sells fund shares either directly to the public or through authorized dealers.

Having money taken at regular intervals from your paycheck and put into a mutual fund is an example of a(n):

All income from mutual funds that are not held in tax-deferred accounts is taxed at identical tax rates.

Leverage means:

Which of the following is a reason to invest in mutual funds?

Mike has decided to purchase a real estate property that is expected to generate a net operating income (NOI)of $63,000 per year. With a 9% cap rate, the property would have an estimated value of:

Purchasing raw land as an investment is highly risky.

Which of the following bond mutual funds invest in tax-exempt securities?

Jenny's adjusted gross income is $120,000 a year and she owns real estate property that generates a rental income of $10,000 annually. If she pays mortgage interest of $4,000 on her property per year, she can write off up to _____ in depreciation.

Exchange traded mutual funds (ETFs):

Which of the following combines some of the operating characteristics of an open-end fund with some of the trading characteristics of a closed-end fund?

Compared to mutual funds, exchange traded funds (ETFs):

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Planning for Retirement

Preserving Your Estate

Filters