Question 1

Which one of the following statements is false?

Accepted Answer

A) Investors purchase mutual funds for diversification. 
B) Investors purchase mutual funds because of their professional management. 
C) Investors who purchase mutual funds are guaranteed a higher rate of return than if they were to purchase comparable stocks and bonds directly. 
D) Professional mutual fund managers work for an investment company. 
E) Even the best portfolio managers sometimes make mistakes. 
A) Investors purchase mutual funds for diversification. 
B) Investors purchase mutual funds because of their professional management. 
C) Investors who purchase mutual funds are guaranteed a higher rate of return than if they were to purchase comparable stocks and bonds directly. 
D) Professional mutual fund managers work for an investment company. 
E) Even the best portfolio managers sometimes make mistakes.

Question 2

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.

Accepted Answer

A) True 
 B)False

Question 3

For a load fund,the average commission usually ranges between 3 and 5 percent of the purchase price.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a disadvantage associated with purchasing a mutual fund?

Accepted Answer

A) difficulty of buying and selling shares 
B) aggressive or unethical sales personnel 
C) only one withdrawal option 
D) no distribution of income and capital gains 
E) all of items listed in the other answers 
A) difficulty of buying and selling shares 
B) aggressive or unethical sales personnel 
C) only one withdrawal option 
D) no distribution of income and capital gains 
E) all of items listed in the other answers

Question 5

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 6

Income dividends are the earnings a fund pays to shareholders from its dividend and interest income.

Accepted Answer

A) True 
 B)False

Question 7

If you are seeking federally tax-exempt income,which type of mutual fund should you purchase?

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

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 9

The commission charge for purchasing fund shares that impose an up-front commission charge ____________ percent.

Accepted Answer

A) averages 0.50 to 1 
B) averages 1 to 2 
C) averages 2 to 4 
D) averages 5 to 6 1/2 
E) may be as high as 8 1/2 
A) averages 0.50 to 1 
B) averages 1 to 2 
C) averages 2 to 4 
D) averages 5 to 6 1/2 
E) may be as high as 8 1/2

Question 10

Contingent deferred sales loads generally:

Accepted Answer

A) apply until the shares you own are in the fund for 10 years or more. 
B) apply regardless of how long your shares have been invested. 
C) increase as the length of time you have been in the fund increases. 
D) decline gradually until there is no withdrawal fee. 
E) apply only for the first year funds are invested. 
A) apply until the shares you own are in the fund for 10 years or more. 
B) apply regardless of how long your shares have been invested. 
C) increase as the length of time you have been in the fund increases. 
D) decline gradually until there is no withdrawal fee. 
E) apply only for the first year funds are invested.

Question 11

Because of up front commission charges,many financial experts and government agencies are critical of:

Accepted Answer

A) regular accounts. 
B) voluntary savings plans. 
C) contractual savings plans. 
D) minimum withdrawal plans. 
E) free contract plans. 
A) regular accounts. 
B) voluntary savings plans. 
C) contractual savings plans. 
D) minimum withdrawal plans. 
E) free contract plans.

Question 12

A mutual fund that requires investors to make regular purchases over a specified period of time is called a:

Accepted Answer

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

Question 13

Noelle Simon is buying shares in a mutual fund that only invests in companies located in Latin America.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 14

While mutual fund income dividends are subject to taxation,capital gain distributions are not subject to taxation.

Accepted Answer

A) True 
 B)False

Question 15

The All-Star Basic Value Fund's portfolio is valued at $210 million.The fund has liabilities of $5 million,and the investment company sponsoring the fund has issued 16,400,000 shares.What is the fund's net asset value?

Accepted Answer

A) $25.00 
B) $21.00 
C) $16.40 
D) $12.50 
E) $5.00 
A) $25.00 
B) $21.00 
C) $16.40 
D) $12.50 
E) $5.00

Question 16

While advisory services provide detailed information on common and preferred stocks,there are no advisory services that provide information on mutual funds.

Accepted Answer

A) True 
 B)False

Question 17

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?

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 18

Which one of the following is not a withdrawal option for a mutual fund?

Accepted Answer

A) withdrawing a specified,dollar amount each investment period 
B) liquidating,or "selling off" a certain number of shares each investment period 
C) withdrawing a fixed percentage of asset growth 
D) withdrawing all income that results from dividends and capital gains distributions 
E) withdrawing a stated amount and treating it as a short-term loan 
A) withdrawing a specified,dollar amount each investment period 
B) liquidating,or "selling off" a certain number of shares each investment period 
C) withdrawing a fixed percentage of asset growth 
D) withdrawing all income that results from dividends and capital gains distributions 
E) withdrawing a stated amount and treating it as a short-term loan

Question 19

Which one of the following statements is false?

Accepted Answer

A) Many investors have found a wealth of information about mutual fund investments on the Internet. 
B) It is possible to obtain 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) A mutual fund's Web site will provide information about how to open an account,current market quotes,and specific fund information. 
A) Many investors have found a wealth of information about mutual fund investments on the Internet. 
B) It is possible to obtain 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) A mutual fund's Web site will provide information about how to open an account,current market quotes,and specific fund information.

Question 20

Bob Newsome purchased 250 shares of the Northern Lights Growth Fund.The purchase cost was $30 per share.If this fund charges a 3 percent load,what is the commission amount he will pay the investment company?

Accepted Answer

A) $3 
B) $30 
C) $300 
D) $225 
E) $250 
A) $3 
B) $30 
C) $300 
D) $225 
E) $250

Which one of the following statements is false?

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.

For a load fund,the average commission usually ranges between 3 and 5 percent of the purchase price.

Which of the following is a disadvantage associated with purchasing a mutual fund?

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?

Income dividends are the earnings a fund pays to shareholders from its dividend and interest income.

If you are seeking federally tax-exempt income,which type of mutual fund should you purchase?

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?

The commission charge for purchasing fund shares that impose an up-front commission charge ____________ percent.

Contingent deferred sales loads generally:

Because of up front commission charges,many financial experts and government agencies are critical of:

A mutual fund that requires investors to make regular purchases over a specified period of time is called a:

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

While mutual fund income dividends are subject to taxation,capital gain distributions are not subject to taxation.

The All-Star Basic Value Fund's portfolio is valued at $210 million.The fund has liabilities of $5 million,and the investment company sponsoring the fund has issued 16,400,000 shares.What is the fund's net asset value?

While advisory services provide detailed information on common and preferred stocks,there are no advisory services that provide information on mutual funds.

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?

Which one of the following is not a withdrawal option for a mutual fund?

Which one of the following statements is false?

Bob Newsome purchased 250 shares of the Northern Lights Growth Fund.The purchase cost was $30 per share.If this fund charges a 3 percent load,what is the commission amount he will pay the investment company?

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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Exam 16: Investing in Mutual Funds

Which one of the following statements is false?

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.

For a load fund,the average commission usually ranges between 3 and 5 percent of the purchase price.

Which of the following is a disadvantage associated with purchasing a mutual fund?

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?

Income dividends are the earnings a fund pays to shareholders from its dividend and interest income.

If you are seeking federally tax-exempt income,which type of mutual fund should you purchase?

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?

The commission charge for purchasing fund shares that impose an up-front commission charge ____________ percent.

Contingent deferred sales loads generally:

Because of up front commission charges,many financial experts and government agencies are critical of:

A mutual fund that requires investors to make regular purchases over a specified period of time is called a:

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

While mutual fund income dividends are subject to taxation,capital gain distributions are not subject to taxation.

The All-Star Basic Value Fund's portfolio is valued at $210 million.The fund has liabilities of $5 million,and the investment company sponsoring the fund has issued 16,400,000 shares.What is the fund's net asset value?

While advisory services provide detailed information on common and preferred stocks,there are no advisory services that provide information on mutual funds.

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?

Which one of the following is not a withdrawal option for a mutual fund?

Which one of the following statements is false?

Bob Newsome purchased 250 shares of the Northern Lights Growth Fund.The purchase cost was $30 per share.If this fund charges a 3 percent load,what is the commission amount he will pay the investment company?

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

Filters