Question 1

All of the following are valid ways to purchase open-end mutual funds except

Accepted Answer

A)  A regular account transaction. 
B)  A voluntary savings plan. 
C)  A contractual savings plan. 
D)  A reinvestment plan. 
E)  All of the ways listed are valid purchase options. 
A)  A regular account transaction. 
B)  A voluntary savings plan. 
C)  A contractual savings plan. 
D)  A reinvestment plan. 
E)  All of the ways listed are valid purchase options. E

Question 2

Mutual funds carry a "real risk" that they can decrease in value.

Accepted Answer

A) True 
 B)False  True

Question 3

The net asset value is calculated as

Accepted Answer

A)  (Liabilities - Value of portfolio) + Number of shares outstanding. 
B)  Number of shares outstanding/(Liabilities - Value of portfolio). 
C)  (Liabilities - Value of portfolio)/Number of shares outstanding. 
D)  (Current market value of portfolio - Liabilities)/Number of shares outstanding. 
E)  Number of shares outstanding/(Value of portfolio - Liabilities). 
A)  (Liabilities - Value of portfolio) + Number of shares outstanding. 
B)  Number of shares outstanding/(Liabilities - Value of portfolio). 
C)  (Liabilities - Value of portfolio)/Number of shares outstanding. 
D)  (Current market value of portfolio - Liabilities)/Number of shares outstanding. 
E)  Number of shares outstanding/(Value of portfolio - Liabilities). D

Question 4

Payments to a fund's shareholders that result from the sale of securities in the fund's portfolio are

Accepted Answer

A)  Capital gain distributions. 
B)  Income dividends. 
C)  Capital gains. 
D)  Mutual fund money. 
E)  Fund taxes. 
A)  Capital gain distributions. 
B)  Income dividends. 
C)  Capital gains. 
D)  Mutual fund money. 
E)  Fund taxes.

Question 5

In 2013, investors in the United States could choose from more than 15,000 mutual funds.

Accepted Answer

A) True 
 B)False

Question 6

For many investors, mutual funds have become the investment of choice and are a part of their retirement account.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not correct?

Accepted Answer

A)  When evaluating a mutual fund, an important consideration is how long the present fund manager been managing the fund. 
B)  Over many years, the majority of managed mutual funds have failed to outperform the Standard & Poor's 500 stock index. 
C)  Managed funds may be open-end funds or closed-end funds. 
D)  A benchmark of a good fund manager is the ability to increase share value when the economy is good and retain that value when the economy is bad. 
E)  A managed fund will outperform an index fund only 60% of the time. 
A)  When evaluating a mutual fund, an important consideration is how long the present fund manager been managing the fund. 
B)  Over many years, the majority of managed mutual funds have failed to outperform the Standard & Poor's 500 stock index. 
C)  Managed funds may be open-end funds or closed-end funds. 
D)  A benchmark of a good fund manager is the ability to increase share value when the economy is good and retain that value when the economy is bad. 
E)  A managed fund will outperform an index fund only 60% of the time.

Question 8

Which of the following is not a way one can access reliable information about mutual funds on the internet?

Accepted Answer

A)  Find statistical information from the web page of the investment companies that sponsor mutual funds. 
B)  Obtain current market values for mutual funds by using a search engine such as http://finance.yahoo.com. 
C)  Review blogs from amateur investors about their favorite mutual funds. 
D)  Research reports for mutual funds using professional advisory services. 
E)  All of these are reliable sources of information about mutual funds. 
A)  Find statistical information from the web page of the investment companies that sponsor mutual funds. 
B)  Obtain current market values for mutual funds by using a search engine such as http://finance.yahoo.com. 
C)  Review blogs from amateur investors about their favorite mutual funds. 
D)  Research reports for mutual funds using professional advisory services. 
E)  All of these are reliable sources of information about mutual funds.

Question 9

Shelby purchased 100 shares of ABCD Growth fund for $10.00 per share. She had income dividends of $15, capital gain distributions of $35, and a capital gain of $120 in the year she sold her shares. What was her percentage of total return on this investment?

Accepted Answer

A)  10% 
B)  15% 
C)  17% 
D)  35% 
E)  120% 
A)  10% 
B)  15% 
C)  17% 
D)  35% 
E)  120%

Question 10

The turnover ratio is a measure of a fund's trading activity.

Accepted Answer

A) True 
 B)False

Question 11

The Anderson Balanced mutual fund charges a sales load of 4.85%. If you invest $15,000, how much of your investment will actually be used to purchase shares in the fund?

Accepted Answer

A)  $14,250.00 
B)  $14,272.50 
C)  $14,400.00 
D)  $14,485.00 
E)  $15,000.00 
A)  $14,250.00 
B)  $14,272.50 
C)  $14,400.00 
D)  $14,485.00 
E)  $15,000.00

Question 12

Which of the following are major reasons that investors purchase mutual funds

Accepted Answer

A)  Diversification. 
B)  Professional management. 
C)  Loads of up to 8.5%. 
D)  A and B only. 
E)  All of the above. 
A)  Diversification. 
B)  Professional management. 
C)  Loads of up to 8.5%. 
D)  A and B only. 
E)  All of the above.

Question 13

The average upfront sales charge for the purchase of a no-load mutual fund is

Accepted Answer

A)  0%. 
B)  2%. 
C)  3-5%. 
D)  8.5%. 
E)  11.5-14.5%. 
A)  0%. 
B)  2%. 
C)  3-5%. 
D)  8.5%. 
E)  11.5-14.5%.

Question 14

Joseph purchased 100 shares of ABCD Growth fund for $10.00 per share for a total investment of $1,000. At the end of one year, he sold his investment for $11.20 per share. What is his total capital gain?

Accepted Answer

A)  $1.20 
B)  $10.00 
C)  $11.00 
D)  $100.00 
E)  $120.00 
A)  $1.20 
B)  $10.00 
C)  $11.00 
D)  $100.00 
E)  $120.00

Question 15

Which of the following is correct for a closed-end fund?

Accepted Answer

A)  It is not traded on a securities exchange. 
B)  The price of its shares is determined by supply and demand, by the value of stocks in the portfolio, and by investor expectations. 
C)  It is not actively managed by professional fund managers. 
D)  Investors are free to buy and sell shares at the net asset value. 
E)  Its load cannot exceed 2%. 
A)  It is not traded on a securities exchange. 
B)  The price of its shares is determined by supply and demand, by the value of stocks in the portfolio, and by investor expectations. 
C)  It is not actively managed by professional fund managers. 
D)  Investors are free to buy and sell shares at the net asset value. 
E)  Its load cannot exceed 2%.

Question 16

Which of the following provides up-to-date information quickly without having to make a trip to the library?

Accepted Answer

A)  Financial publications 
B)  Internet 
C)  Mutual fund annual report 
D)  Newspapers 
E)  Professional advisory services 
A)  Financial publications 
B)  Internet 
C)  Mutual fund annual report 
D)  Newspapers 
E)  Professional advisory services

Question 17

A problem with taxation of mutual funds is

Accepted Answer

A)  Professional management. 
B)  The possibility to eliminate taxes if held in a Roth individual retirement account. 
C)  Being required to report reinvested income dividends and capital gain distributions on your federal tax return as current income. 
D)  Tax deferral if the fund is held in a retirement account like a 401(k) account. 
E)  The diversification offered to investors. 
A)  Professional management. 
B)  The possibility to eliminate taxes if held in a Roth individual retirement account. 
C)  Being required to report reinvested income dividends and capital gain distributions on your federal tax return as current income. 
D)  Tax deferral if the fund is held in a retirement account like a 401(k) account. 
E)  The diversification offered to investors.

Question 18

A fee charged to defray the costs of advertising and marketing a mutual fund is called a ____ fee.

Accepted Answer

A)  3c 
B)  12b-1 
C)  14c-2 
D)  401(k) 
E)  403(b) 
A)  3c 
B)  12b-1 
C)  14c-2 
D)  401(k) 
E)  403(b)

Question 19

Sally wants to invest in a mutual fund. The mutual fund must provide a(n) ____ to her as a potential investor.

Accepted Answer

A)  analysis from a financial publication 
B)  past performance report 
C)  prospectus 
D)  quarterly report 
E)  summary report 
A)  analysis from a financial publication 
B)  past performance report 
C)  prospectus 
D)  quarterly report 
E)  summary report

Question 20

If you hold mutual fund shares in your Roth individual retirement account, the taxes on reinvested income will be

Accepted Answer

A)  Deferred. 
B)  Eliminated. 
C)  Evaluated. 
D)  Payable immediately. 
E)  None of these. 
A)  Deferred. 
B)  Eliminated. 
C)  Evaluated. 
D)  Payable immediately. 
E)  None of these.

All of the following are valid ways to purchase open-end mutual funds except

Mutual funds carry a "real risk" that they can decrease in value.

The net asset value is calculated as

Payments to a fund's shareholders that result from the sale of securities in the fund's portfolio are

In 2013, investors in the United States could choose from more than 15,000 mutual funds.

For many investors, mutual funds have become the investment of choice and are a part of their retirement account.

Which of the following is not correct?

Which of the following is not a way one can access reliable information about mutual funds on the internet?

Shelby purchased 100 shares of ABCD Growth fund for $10.00 per share. She had income dividends of $15, capital gain distributions of $35, and a capital gain of $120 in the year she sold her shares. What was her percentage of total return on this investment?

The turnover ratio is a measure of a fund's trading activity.

The Anderson Balanced mutual fund charges a sales load of 4.85%. If you invest $15,000, how much of your investment will actually be used to purchase shares in the fund?

Which of the following are major reasons that investors purchase mutual funds

The average upfront sales charge for the purchase of a no-load mutual fund is

Joseph purchased 100 shares of ABCD Growth fund for $10.00 per share for a total investment of $1,000. At the end of one year, he sold his investment for $11.20 per share. What is his total capital gain?

Which of the following is correct for a closed-end fund?

Which of the following provides up-to-date information quickly without having to make a trip to the library?

A problem with taxation of mutual funds is

A fee charged to defray the costs of advertising and marketing a mutual fund is called a ____ fee.

Sally wants to invest in a mutual fund. The mutual fund must provide a(n) ____ to her as a potential investor.

If you hold mutual fund shares in your Roth individual retirement account, the taxes on reinvested income will be

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Financial Planning With Life Insurance

Investing Fundamentals and Bonds

Investing in Stocks

Starting Early: Retirement and Estate Planning

Filters

Exam 13: Investing in Mutual Funds

All of the following are valid ways to purchase open-end mutual funds except

Mutual funds carry a "real risk" that they can decrease in value.

The net asset value is calculated as

Payments to a fund's shareholders that result from the sale of securities in the fund's portfolio are

In 2013, investors in the United States could choose from more than 15,000 mutual funds.

For many investors, mutual funds have become the investment of choice and are a part of their retirement account.

Which of the following is not correct?

Which of the following is not a way one can access reliable information about mutual funds on the internet?

Shelby purchased 100 shares of ABCD Growth fund for $10.00 per share. She had income dividends of $15, capital gain distributions of $35, and a capital gain of $120 in the year she sold her shares. What was her percentage of total return on this investment?

The turnover ratio is a measure of a fund's trading activity.

The Anderson Balanced mutual fund charges a sales load of 4.85%. If you invest $15,000, how much of your investment will actually be used to purchase shares in the fund?

Which of the following are major reasons that investors purchase mutual funds

The average upfront sales charge for the purchase of a no-load mutual fund is

Joseph purchased 100 shares of ABCD Growth fund for $10.00 per share for a total investment of $1,000. At the end of one year, he sold his investment for $11.20 per share. What is his total capital gain?

Which of the following is correct for a closed-end fund?

Which of the following provides up-to-date information quickly without having to make a trip to the library?

A problem with taxation of mutual funds is

A fee charged to defray the costs of advertising and marketing a mutual fund is called a ____ fee.

Sally wants to invest in a mutual fund. The mutual fund must provide a(n) ____ to her as a potential investor.

If you hold mutual fund shares in your Roth individual retirement account, the taxes on reinvested income will be

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Financial Planning With Life Insurance

Investing Fundamentals and Bonds

Investing in Stocks

Starting Early: Retirement and Estate Planning

Filters