Question 1

Which of the following options can a mutual fund investor use to purchase shares in an open-end fund?

Accepted Answer

A)  Regular accounts 
B)  Voluntary savings plan 
C)  Contractual savings plan 
D)  Reinvestment plan 
E)  All of these are ways to purchase shares in an open-end fund. 
A)  Regular accounts 
B)  Voluntary savings plan 
C)  Contractual savings plan 
D)  Reinvestment plan 
E)  All of these are ways to purchase shares in an open-end fund. E

Question 2

The average management fee for all mutual funds is:

Accepted Answer

A)  less than 0.25 percent. 
B)  0.25 percent to 0.50 percent. 
C)  0.50 to 1 percent. 
D)  1.25 to 2.50 percent. 
E)  2.50 to 5.00 percent. 
A)  less than 0.25 percent. 
B)  0.25 percent to 0.50 percent. 
C)  0.50 to 1 percent. 
D)  1.25 to 2.50 percent. 
E)  2.50 to 5.00 percent. C

Question 3

When an investor purchases shares in a load fund, the average sales charge is usually between ____________ percent.

Accepted Answer

A)  0.5 to 2 
B)  1 and 3 
C)  3 and 5 
D)  5 and 7 
E)  4 and 6 
A)  0.5 to 2 
B)  1 and 3 
C)  3 and 5 
D)  5 and 7 
E)  4 and 6 C

Question 4

Cindy and John Appleby just inherited $30,000 and would like to invest the money in a conservative mutual fund. Since they have never invested in mutual funds, they ask for your help. In your own words, describe the sources of information available for evaluating a mutual fund investment.

Accepted Answer

The following factors can be used to eva

Question 5

Nathan Fuller is buying shares in a mutual fund that invests in the same companies as those found in the S&P 500 and in roughly the same proportion. What type of mutual fund is he 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 6

A mutual fund in which shares are issued only when the fund is organized is called a(n) ____________ 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 7

Which type of mutual fund invests primarily in corporate bonds with maturities between 5 and 10 years?

Accepted Answer

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

Question 8

Which of the following is an advantage of an exchange traded fund (ETF)?

Accepted Answer

A)  No minimum investment amount 
B)  Buying and selling shares through a broker at any time at the current market price 
C)  Low management fees 
D)  Using limit orders to both buy and sell 
E)  All of these are advantages of ETFs. 
A)  No minimum investment amount 
B)  Buying and selling shares through a broker at any time at the current market price 
C)  Low management fees 
D)  Using limit orders to both buy and sell 
E)  All of these are advantages of ETFs.

Question 9

Which of the following assets would typically be included in an asset allocation fund?

Accepted Answer

A)  Stocks 
B)  Bonds 
C)  Fixed-income securities 
D)  Money market instruments 
E)  All of these would typically be part of an asset allocation fund. 
A)  Stocks 
B)  Bonds 
C)  Fixed-income securities 
D)  Money market instruments 
E)  All of these would typically be part of an asset allocation fund.

Question 10

The turnover ratio of a mutual fund measures the:

Accepted Answer

A)  length of time a manager has been in charge of the fund. 
B)  amount of profit the fund earns from one investment period to the next. 
C)  number of months the average investor holds the fund before selling. 
D)  percentage of a fund's holdings that have changed during a 12-month period. 
E)  percentage of institutional investors who own the fund. 
A)  length of time a manager has been in charge of the fund. 
B)  amount of profit the fund earns from one investment period to the next. 
C)  number of months the average investor holds the fund before selling. 
D)  percentage of a fund's holdings that have changed during a 12-month period. 
E)  percentage of institutional investors who own the fund.

Question 11

The New American Enterprise Mutual Fund's portfolio is valued at $120 million. The fund has liabilities of $4 million, and the investment company sponsoring the fund has issued 5,800,000 shares. What is the fund's net asset value?

Accepted Answer

A)  $120 
B)  $58 
C)  $40 
D)  $30 
E)  $20 
A)  $120 
B)  $58 
C)  $40 
D)  $30 
E)  $20

Question 12

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a:

Accepted Answer

A)  regular account transaction. 
B)  voluntary savings plan. 
C)  contractual savings plan. 
D)  minimum withdrawal plan. 
E)  free contract plan. 
A)  regular account transaction. 
B)  voluntary savings plan. 
C)  contractual savings plan. 
D)  minimum withdrawal plan. 
E)  free contract plan.

Question 13

As a shareholder in a mutual fund, you should receive a(n):

Accepted Answer

A)  annual report. 
B)  12b-1 report. 
C)  annual prospectus. 
D)  annual summary report from the president of the investment company. 
E)  copy of the annual mutual funds report containing a summary of the professional advisory services comments. 
A)  annual report. 
B)  12b-1 report. 
C)  annual prospectus. 
D)  annual summary report from the president of the investment company. 
E)  copy of the annual mutual funds report containing a summary of the professional advisory services comments.

Question 14

Louise Prescott is buying shares in a mutual fund that invests in companies 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 15

Phyllis Payne is buying shares in a mutual fund that invests in companies with a long history of paying a dividend. What type of mutual fund is she buying?

Accepted Answer

A)  Aggressive growth fund 
B)  Equity income fund 
C)  Global fund 
D)  International fund 
E)  Regional fund 
A)  Aggressive growth fund 
B)  Equity income fund 
C)  Global fund 
D)  International fund 
E)  Regional fund

Question 16

When one investment company manages a group of mutual funds, it is called a(n):

Accepted Answer

A)  family of funds. 
B)  exchange fund. 
C)  diversification fund. 
D)  versatility fund. 
E)  asset allocation fund. 
A)  family of funds. 
B)  exchange fund. 
C)  diversification fund. 
D)  versatility fund. 
E)  asset allocation fund.

Question 17

During 2008, Lincoln Masters received income dividends of $850 and capital gain distributions of $540. Based on this information:

Accepted Answer

A)  both amounts must be included as taxable income. 
B)  only the dividends are taxable. 
C)  only the capital gains are taxable. 
D)  both amounts are tax-exempt. 
E)  both amounts are taxed at a rate of 5 percent. 
A)  both amounts must be included as taxable income. 
B)  only the dividends are taxable. 
C)  only the capital gains are taxable. 
D)  both amounts are tax-exempt. 
E)  both amounts are taxed at a rate of 5 percent.

Question 18

Will Hopkins is getting ready to purchase shares in a mutual fund. He will have to pay an upfront sales commission to purchase these shares. What type of shares is he buying?

Accepted Answer

A)  Class A 
B)  Class B 
C)  Class C 
D)  Either class A or B 
E)  Either class B or C 
A)  Class A 
B)  Class B 
C)  Class C 
D)  Either class A or B 
E)  Either class B or C

Question 19

Over many years, the majority of managed mutual funds outperform the Standard & Poor's stock index.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following funds would be considered the safest investment?

Accepted Answer

A)  Growth fund 
B)  Money market fund 
C)  Sector fund 
D)  Asset allocation fund 
E)  High-yield bond fund 
A)  Growth fund 
B)  Money market fund 
C)  Sector fund 
D)  Asset allocation fund 
E)  High-yield bond fund

Which of the following options can a mutual fund investor use to purchase shares in an open-end fund?

The average management fee for all mutual funds is:

When an investor purchases shares in a load fund, the average sales charge is usually between ____________ percent.

Cindy and John Appleby just inherited $30,000 and would like to invest the money in a conservative mutual fund. Since they have never invested in mutual funds, they ask for your help. In your own words, describe the sources of information available for evaluating a mutual fund investment.

Nathan Fuller is buying shares in a mutual fund that invests in the same companies as those found in the S&P 500 and in roughly the same proportion. What type of mutual fund is he buying?

A mutual fund in which shares are issued only when the fund is organized is called a(n) ____________ fund.

Which type of mutual fund invests primarily in corporate bonds with maturities between 5 and 10 years?

Which of the following is an advantage of an exchange traded fund (ETF)?

Which of the following assets would typically be included in an asset allocation fund?

The turnover ratio of a mutual fund measures the:

The New American Enterprise Mutual Fund's portfolio is valued at $120 million. The fund has liabilities of $4 million, and the investment company sponsoring the fund has issued 5,800,000 shares. What is the fund's net asset value?

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a:

As a shareholder in a mutual fund, you should receive a(n):

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

Phyllis Payne is buying shares in a mutual fund that invests in companies with a long history of paying a dividend. What type of mutual fund is she buying?

When one investment company manages a group of mutual funds, it is called a(n):

During 2008, Lincoln Masters received income dividends of $850 and capital gain distributions of $540. Based on this information:

Will Hopkins is getting ready to purchase shares in a mutual fund. He will have to pay an upfront sales commission to purchase these shares. What type of shares is he buying?

Over many years, the majority of managed mutual funds outperform the Standard & Poor's stock index.

Which one of the following funds would be considered the safest investment?

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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

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Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

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Investing in Stocks

Investing in Bonds

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Starting Early: Retirement Planning

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Exam 16: Investing in Mutual Funds

Which of the following options can a mutual fund investor use to purchase shares in an open-end fund?

The average management fee for all mutual funds is:

When an investor purchases shares in a load fund, the average sales charge is usually between ____________ percent.

Cindy and John Appleby just inherited $30,000 and would like to invest the money in a conservative mutual fund. Since they have never invested in mutual funds, they ask for your help. In your own words, describe the sources of information available for evaluating a mutual fund investment.

Nathan Fuller is buying shares in a mutual fund that invests in the same companies as those found in the S&P 500 and in roughly the same proportion. What type of mutual fund is he buying?

A mutual fund in which shares are issued only when the fund is organized is called a(n) ____________ fund.

Which type of mutual fund invests primarily in corporate bonds with maturities between 5 and 10 years?

Which of the following is an advantage of an exchange traded fund (ETF)?

Which of the following assets would typically be included in an asset allocation fund?

The turnover ratio of a mutual fund measures the:

The New American Enterprise Mutual Fund's portfolio is valued at $120 million. The fund has liabilities of $4 million, and the investment company sponsoring the fund has issued 5,800,000 shares. What is the fund's net asset value?

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a:

As a shareholder in a mutual fund, you should receive a(n):

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

Phyllis Payne is buying shares in a mutual fund that invests in companies with a long history of paying a dividend. What type of mutual fund is she buying?

When one investment company manages a group of mutual funds, it is called a(n):

During 2008, Lincoln Masters received income dividends of $850 and capital gain distributions of $540. Based on this information:

Will Hopkins is getting ready to purchase shares in a mutual fund. He will have to pay an upfront sales commission to purchase these shares. What type of shares is he buying?

Over many years, the majority of managed mutual funds outperform the Standard & Poor's stock index.

Which one of the following funds would be considered the safest investment?

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

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