Exam 16: Investing in Mutual Funds

A mutual fund that invests in common stocks and bonds with the primary objectives of conserving capital, providing income, and long-term growth is called a(n) ____________ fund.

If an investor uses a reinvestment plan to invest income dividends and capital-gain distributions:

Mutual funds that apportion their investments among common stocks and bonds are referred to as small-cap funds.

A contingent deferred sales load, which is a charge that shareholders pay when they withdraw their investment from a mutual fund, can be as low as 1 percent and as high as ___ depending on how long you own the mutual fund before making a withdrawal.

Which of the following statements is false?

Class C shares, because of their ongoing, higher 12b-1 fees, are often more expensive than Class A or Class B shares over a long period of time.

To purchase shares in an open-end fund, you may use four options: regular accounts, voluntary savings plans, contractual savings plans, and reinvestment plans.

Joseph Carter is buying shares in a mutual fund that is investing in stocks all over the world, including the United States. What type of mutual fund is this?

What is the most common reason given by mutual fund owners for investing in funds?

When Pete Mills went to withdraw $5,000 from the Nationwide Fidelity Mutual fund, he was informed that the fund would charge 5 percent of the amount withdrawn. What is the dollar amount of the withdrawal charge?

Because an index fund is a mirror image of a specific index, the dollar value of a share in an index fund increases when the index increases.

A contingent deferred sales load is a 1 to 5 percent charge that shareholders pay when they withdraw their investment from a mutual fund.

A no-load fund is a mutual fund in which no sales charge is paid by the individual investor to buy or sell shares.

There are about _____ exchange-traded funds.

Typically, you must invest at least $15,000 to open a mutual fund account.

Sloan Richards is buying shares in a mutual fund that invests in companies that have a market capitalization of less than $2 billion. What type of mutual fund is this?

Mutual funds that invest in a variety of smaller, lesser-known companies that offer higher growth potential are referred to as sector funds.

All information related to management fees, contingent deferred sales fees, 12b-1 fees, and other expenses are contained in a mutual fund's fee table.

A 1 to 5 percent fee that investors pay when they withdraw their investment from a mutual fund is called a:

Marcie is seeking interest income but wants to ensure that her investment is as safe as possible. Which type of mutual fund best fits her requirements?