Question 1

Income dividends and capital gain distributions are:

Accepted Answer

A) exempt from taxation. 
B) subject to federal taxation. 
C) subject to federal taxation after the first $1,000. 
D) subject to federal taxation after the first $5,000. 
E) subject to federal taxation after the first $10,000. 
A) exempt from taxation. 
B) subject to federal taxation. 
C) subject to federal taxation after the first $1,000. 
D) subject to federal taxation after the first $5,000. 
E) subject to federal taxation after the first $10,000.

Question 2

Although mutual funds are popular among individual investors,most people do not use them as part of an IRA or retirement account.

Accepted Answer

A) True 
 B)False

Question 3

Caroline Campbell is buying shares in a mutual fund that invests in bonds offered by foreign companies and governments.What type of mutual fund is she buying?

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 4

Who owns the most mutual funds?

Accepted Answer

A) investors less than 35 years old 
B) investors between 35 and 44 years old 
C) investors between 45 to 54 years old 
D) investors between 55 to 64 years old 
E) investors over 65 years old 
A) investors less than 35 years old 
B) investors between 35 and 44 years old 
C) investors between 45 to 54 years old 
D) investors between 55 to 64 years old 
E) investors over 65 years old

Question 5

Another name for lifecycle funds is:

Accepted Answer

A) balanced funds. 
B) funds of funds. 
C) target-date funds. 
D) asset allocation funds. 
E) money market funds. 
A) balanced funds. 
B) funds of funds. 
C) target-date funds. 
D) asset allocation funds. 
E) money market funds.

Question 6

There are about _____ exchange-traded funds.

Accepted Answer

A) 25 
B) 50 
C) 150 
D) 1,450 
E) 1,000 
A) 25 
B) 50 
C) 150 
D) 1,450 
E) 1,000

Question 7

Why do Americans invest in mutual funds?

Accepted Answer

A) Saving for someone's education 
B) Saving for emergencies 
C) Using funds to reduce taxable income 
D) Saving for retirement 
E) All of these 
A) Saving for someone's education 
B) Saving for emergencies 
C) Using funds to reduce taxable income 
D) Saving for retirement 
E) All of these

Question 8

A mutual fund whose shares are issued and redeemed by the investment company at the request of investors is called a ____________ 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 9

Which one of the following statements is false?

Accepted Answer

A) An exchange-traded fund generally invests in the stocks or securities contained in a stock or securities index. 
B) With an exchange-traded fund, an investor can purchase as little as one share. 
C) The majority of exchange-traded funds tend to mirror the performance of the index. 
D) A passively-managed exchange-traded fund manager needs to make more decisions than an actively-managed mutual fund manager. 
E) No minimum dollar investment amount is required for exchange-traded funds. 
A) An exchange-traded fund generally invests in the stocks or securities contained in a stock or securities index. 
B) With an exchange-traded fund, an investor can purchase as little as one share. 
C) The majority of exchange-traded funds tend to mirror the performance of the index. 
D) A passively-managed exchange-traded fund manager needs to make more decisions than an actively-managed mutual fund manager. 
E) No minimum dollar investment amount is required for exchange-traded funds.

Question 10

Which one of the following statements is true?

Accepted Answer

A) Most mutual funds are managed funds. 
B) How long the present fund manager has been managing the fund is irrelevant. 
C) You should ignore fees when comparing mutual funds. 
D) Managed funds are usually index funds. 
E) A team of managers is always better than a single fund manager. 
A) Most mutual funds are managed funds. 
B) How long the present fund manager has been managing the fund is irrelevant. 
C) You should ignore fees when comparing mutual funds. 
D) Managed funds are usually index funds. 
E) A team of managers is always better than a single fund manager.

Question 11

Which of the following would be found in a mutual fund's prospectus?

Accepted Answer

A) Statement describing the risk factors associated with the fund 
B) Description of the fund's past performance 
C) Information about the fund's management 
D) The process for buying and selling shares in the fund 
E) All of these would be found in a prospectus. 
A) Statement describing the risk factors associated with the fund 
B) Description of the fund's past performance 
C) Information about the fund's management 
D) The process for buying and selling shares in the fund 
E) All of these would be found in a prospectus.

Question 12

Within a family of funds,charges for exchanges generally are small for each transaction,and the fee may be as low as _____ per transaction.

Accepted Answer

A) $1 
B) $5 
C) $10 
D) $15 
E) $20 
A) $1 
B) $5 
C) $10 
D) $15 
E) $20

Question 13

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 or "been replaced" 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 or "been replaced" during a 12-month period. 
E) percentage of institutional investors who own the fund.

Question 14

Noelle Simon is buying shares in a mutual fund that only invests in companies located in the Latin America area.What type of mutual fund is this?

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 15

What percent of mutual funds receive a 5-star rating from Morningstar?

Accepted Answer

A) 5 
B) 10 
C) 15 
D) 20 
E) 25 
A) 5 
B) 10 
C) 15 
D) 20 
E) 25

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Henrietta Marston plans to retire in the year 2050.She is considering a fund that will be more risk-oriented now and become increasingly conservative as she approaches retirement.Which of the following funds would you recommend to her?

Accepted Answer

A) Equity income fund 
B) Regional fund 
C) Sector fund 
D) Lifecycle fund 
E) Fund of funds 
A) Equity income fund 
B) Regional fund 
C) Sector fund 
D) Lifecycle fund 
E) Fund of funds

Question 18

For most mutual funds,the net asset value is calculated:

Accepted Answer

A) yearly. 
B) quarterly. 
C) weekly. 
D) daily. 
E) hourly. 
A) yearly. 
B) quarterly. 
C) weekly. 
D) daily. 
E) hourly.

Question 19

Tiffany Scott puts $10,000 into a load mutual fund.She knows that her up-front sales commission is 6%.How much of her money actually goes to buy shares in the mutual fund?

Accepted Answer

A) $10,000 
B) $9,400 
C) $600 
D) $10,600 
E) $950 
A) $10,000 
B) $9,400 
C) $600 
D) $10,600 
E) $950

Question 20

The typical expense ratio for an index fund is:

Accepted Answer

A) 0.50 percent or less. 
B) between 0.50 and 1 percent. 
C) between 1 and 2 percent. 
D) between 2 and 3 percent. 
E) over 5 percent. 
A) 0.50 percent or less. 
B) between 0.50 and 1 percent. 
C) between 1 and 2 percent. 
D) between 2 and 3 percent. 
E) over 5 percent.

Income dividends and capital gain distributions are:

Although mutual funds are popular among individual investors,most people do not use them as part of an IRA or retirement account.

Caroline Campbell is buying shares in a mutual fund that invests in bonds offered by foreign companies and governments.What type of mutual fund is she buying?

Who owns the most mutual funds?

Another name for lifecycle funds is:

There are about _____ exchange-traded funds.

Why do Americans invest in mutual funds?

A mutual fund whose shares are issued and redeemed by the investment company at the request of investors is called a ____________ fund.

Which one of the following statements is false?

Which one of the following statements is true?

Which of the following would be found in a mutual fund's prospectus?

Within a family of funds,charges for exchanges generally are small for each transaction,and the fee may be as low as _____ per transaction.

The turnover ratio of a mutual fund measures the:

Noelle Simon is buying shares in a mutual fund that only invests in companies located in the Latin America area.What type of mutual fund is this?

What percent of mutual funds receive a 5-star rating from Morningstar?

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

Henrietta Marston plans to retire in the year 2050.She is considering a fund that will be more risk-oriented now and become increasingly conservative as she approaches retirement.Which of the following funds would you recommend to her?

For most mutual funds,the net asset value is calculated:

Tiffany Scott puts $10,000 into a load mutual fund.She knows that her up-front sales commission is 6%.How much of her money actually goes to buy shares in the mutual fund?

The typical expense ratio for an index fund is:

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

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Exam 16: Investing in Mutual Funds

Income dividends and capital gain distributions are:

Although mutual funds are popular among individual investors,most people do not use them as part of an IRA or retirement account.

Caroline Campbell is buying shares in a mutual fund that invests in bonds offered by foreign companies and governments.What type of mutual fund is she buying?

Who owns the most mutual funds?

Another name for lifecycle funds is:

There are about _____ exchange-traded funds.

Why do Americans invest in mutual funds?

A mutual fund whose shares are issued and redeemed by the investment company at the request of investors is called a ____________ fund.

Which one of the following statements is false?

Which one of the following statements is true?

Which of the following would be found in a mutual fund's prospectus?

Within a family of funds,charges for exchanges generally are small for each transaction,and the fee may be as low as _____ per transaction.

The turnover ratio of a mutual fund measures the:

Noelle Simon is buying shares in a mutual fund that only invests in companies located in the Latin America area.What type of mutual fund is this?

What percent of mutual funds receive a 5-star rating from Morningstar?

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

Henrietta Marston plans to retire in the year 2050.She is considering a fund that will be more risk-oriented now and become increasingly conservative as she approaches retirement.Which of the following funds would you recommend to her?

For most mutual funds,the net asset value is calculated:

Tiffany Scott puts $10,000 into a load mutual fund.She knows that her up-front sales commission is 6%.How much of her money actually goes to buy shares in the mutual fund?

The typical expense ratio for an index fund is:

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