Question 1

Another name for a mutual fund that charges a contingent deferred sales load is a ____________ fund.

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) E 
A) A 
B) B 
C) C 
D) D 
E) E

Question 2

A municipal bond fund:

Accepted Answer

A) is too risky for most investors. 
B) invests in mutual bonds. 
C) invests in bonds that are backed by the federal government. 
D) is a risk-free investment. 
E) invests solely in Treasury bonds. 
A) is too risky for most investors. 
B) invests in mutual bonds. 
C) invests in bonds that are backed by the federal government. 
D) is a risk-free investment. 
E) invests solely in Treasury bonds.

Question 3

An investment company sponsoring a mutual fund must give potential investors a:

Accepted Answer

A) 12b 
B) prospectus. 
C) disclosure/evaluation form. 
D) redemption fee sheet. 
E) annual report. 
A) 12b 
B) prospectus. 
C) disclosure/evaluation form. 
D) redemption fee sheet. 
E) annual report.

Question 4

The fund manager is ultimately responsible for a fund's success,because he/she decides when to buy or sell securities in the fund.

Accepted Answer

A) True 
 B)False

Question 5

Melanie Davis is getting ready to purchase shares in a mutual fund.The fund will charge her a sales charge only if she redeems her shares within a stated period of time.What type of shares is she 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 6

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$5,000 from the Nationwide Fidelity Mutual fund,he was informed that the fund would charge 5 percent of the amount withdrawn.What is the dollar amount of the withdrawal charge?

Accepted Answer

A) $2,500 
B) $500 
C) $250 
D) $25 
E) $50 
A) $2,500 
B) $500 
C) $250 
D) $25 
E) $50

Question 7

Norma Rose is buying shares in a mutual fund that invests in foreign stocks sold in securities markets throughout the world,excluding the United States.What type of mutual 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 8

Sloan Richards is buying shares in a mutual fund that invests in companies with a total capitalization of less than $1 billion.What type of mutual fund is this?

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 9

If the dollar amount of total return on your mutual fund is $195 and the original cost of your investment is $1,400,then what is your percentage of total return?

Accepted Answer

A) 14.00 percent 
B) 19.50 percent 
C) 7.18 percent 
D) 13.92 percent 
E) 9.13 percent 
A) 14.00 percent 
B) 19.50 percent 
C) 7.18 percent 
D) 13.92 percent 
E) 9.13 percent

Question 10

Investors in an open-end fund are free to buy and sell shares at the net asset value.

Accepted Answer

A) True 
 B)False

Question 11

Which one of the following statements is false?

Accepted Answer

A) As an investor, you should be concerned with how long a fund manager has been managing a mutual fund. 
B) The fund manager chooses when to buy and sell securities in the fund. 
C) If a manager has been managing a fund for 5 or 10 years, it is time to change managers and get someone with new ideas. 
D) The fund manager is responsible for choosing the securities that are contained in the fund. 
E) Managed funds have higher fees than index funds. 
A) As an investor, you should be concerned with how long a fund manager has been managing a mutual fund. 
B) The fund manager chooses when to buy and sell securities in the fund. 
C) If a manager has been managing a fund for 5 or 10 years, it is time to change managers and get someone with new ideas. 
D) The fund manager is responsible for choosing the securities that are contained in the fund. 
E) Managed funds have higher fees than index funds.

Question 12

The potential return on any investment should be indirectly related to the risk the investor assumes.

Accepted Answer

A) True 
 B)False

Question 13

Which one of the following statements is false regarding mutual funds and the Internet?

Accepted Answer

A) Many investors have found a wealth of information about mutual fund investments on the internet. 
B) It is possible to obtain current market values for a mutual fund by using the internet. 
C) Most investment companies that sponsor mutual funds have a web page. 
D) Professional advisory services are prohibited from discussing mutual funds on their web pages. 
E) The investment companies' website will provide procedures for opening an account, how much money is required to open an account, and statistical information about individual funds. 
A) Many investors have found a wealth of information about mutual fund investments on the internet. 
B) It is possible to obtain current market values for a mutual fund by using the internet. 
C) Most investment companies that sponsor mutual funds have a web page. 
D) Professional advisory services are prohibited from discussing mutual funds on their web pages. 
E) The investment companies' website will provide procedures for opening an account, how much money is required to open an account, and statistical information about individual funds.

Question 14

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 15

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

Accepted Answer

A) True 
 B)False

Question 16

Martin Campbell wants to invest in mutual funds,but is also worried about diversification.Which fund would you recommend to him?

Accepted Answer

A) Income fund 
B) Long-term corporate bond fund 
C) U.S.government bond fund 
D) Midcap fund 
E) A fund of funds 
A) Income fund 
B) Long-term corporate bond fund 
C) U.S.government bond fund 
D) Midcap fund 
E) A fund of funds

Question 17

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

Question 18

You should consider your tolerance for risk before investing in mutual funds.

Accepted Answer

A) True 
 B)False

Question 19

Phyllis Payne is buying shares in a mutual fund that invests in companies with a long history of paying a dividend whose objective is to provide income to shareholders.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 20

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

Accepted Answer

A) True 
 B)False

Another name for a mutual fund that charges a contingent deferred sales load is a ____________ fund.

A municipal bond fund:

An investment company sponsoring a mutual fund must give potential investors a:

The fund manager is ultimately responsible for a fund's success,because he/she decides when to buy or sell securities in the fund.

Melanie Davis is getting ready to purchase shares in a mutual fund.The fund will charge her a sales charge only if she redeems her shares within a stated period of time.What type of shares is she buying?

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?

Norma Rose is buying shares in a mutual fund that invests in foreign stocks sold in securities markets throughout the world,excluding the United States.What type of mutual is she buying?

Sloan Richards is buying shares in a mutual fund that invests in companies with a total capitalization of less than $1 billion.What type of mutual fund is this?

If the dollar amount of total return on your mutual fund is $195 and the original cost of your investment is $1,400,then what is your percentage of total return?

Investors in an open-end fund are free to buy and sell shares at the net asset value.

Which one of the following statements is false?

The potential return on any investment should be indirectly related to the risk the investor assumes.

Which one of the following statements is false regarding mutual funds and the Internet?

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

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

Martin Campbell wants to invest in mutual funds,but is also worried about diversification.Which fund would you recommend to him?

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

You should consider your tolerance for risk before investing in mutual funds.

Phyllis Payne is buying shares in a mutual fund that invests in companies with a long history of paying a dividend whose objective is to provide income to shareholders.What type of mutual fund is she buying?

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

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 Stock

Investing in Bonds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

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Exam 16: Investing in Mutual Funds

Another name for a mutual fund that charges a contingent deferred sales load is a ____________ fund.

A municipal bond fund:

An investment company sponsoring a mutual fund must give potential investors a:

The fund manager is ultimately responsible for a fund's success,because he/she decides when to buy or sell securities in the fund.

Melanie Davis is getting ready to purchase shares in a mutual fund.The fund will charge her a sales charge only if she redeems her shares within a stated period of time.What type of shares is she buying?

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?

Norma Rose is buying shares in a mutual fund that invests in foreign stocks sold in securities markets throughout the world,excluding the United States.What type of mutual is she buying?

Sloan Richards is buying shares in a mutual fund that invests in companies with a total capitalization of less than $1 billion.What type of mutual fund is this?

If the dollar amount of total return on your mutual fund is $195 and the original cost of your investment is $1,400,then what is your percentage of total return?

Investors in an open-end fund are free to buy and sell shares at the net asset value.

Which one of the following statements is false?

The potential return on any investment should be indirectly related to the risk the investor assumes.

Which one of the following statements is false regarding mutual funds and the Internet?

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

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

Martin Campbell wants to invest in mutual funds,but is also worried about diversification.Which fund would you recommend to him?

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

You should consider your tolerance for risk before investing in mutual funds.

Phyllis Payne is buying shares in a mutual fund that invests in companies with a long history of paying a dividend whose objective is to provide income to shareholders.What type of mutual fund is she buying?

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

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 Stock

Investing in Bonds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters