Question 1

An open-end mutual fund may do all of the following except

Accepted Answer

A) charge no fee to buy or sell shares. 
B) charge a fee to buy but not sell shares. 
C) charge a fee to sell but not buy shares. 
D) charge a fee to both buy and sell shares. 
A) charge no fee to buy or sell shares. 
B) charge a fee to buy but not sell shares. 
C) charge a fee to sell but not buy shares. 
D) charge a fee to both buy and sell shares.

Question 2

What would be the tax consequence of owning a mutual fund that made distributions of $600 resulting from short-term gains and $800 resulting from long-term gains assuming a 30 percent tax bracket and a 10 percent capital gains rate?
(a)$420
(b)$140
(c)$300
(d)$260

Accepted Answer

The answer of What would be the tax consequence of...

Question 3

The difference between an international and a global fund is

Accepted Answer

A) global funds invest in U.S.firms and those of other countries too. 
B) international funds invest in U.S.firms or governments while global funds do not. 
C) international funds invest in Treasury securities but no U.S.firms while global funds invest in both. 
D) there is no difference except in name. 
A) global funds invest in U.S.firms and those of other countries too. 
B) international funds invest in U.S.firms or governments while global funds do not. 
C) international funds invest in Treasury securities but no U.S.firms while global funds invest in both. 
D) there is no difference except in name.

Question 4

Existing shares of closed-end mutual fund companies are purchased

Accepted Answer

A) from the investment company directly. 
B) from the investment company through a broker. 
C) from other investors in the stock market. 
D) from a bank. 
A) from the investment company directly. 
B) from the investment company through a broker. 
C) from other investors in the stock market. 
D) from a bank.

Question 5

Advantages of investing in mutual funds include all of the following except

Accepted Answer

A) diversification of your investment. 
B) professional management. 
C) meeting specific investment goals. 
D) there is virtually no risk of loss. 
A) diversification of your investment. 
B) professional management. 
C) meeting specific investment goals. 
D) there is virtually no risk of loss.

Question 6

Investing in which of the following funds will typically give you the least diversification?

Accepted Answer

A) Growth funds 
B) Capital appreciation funds 
C) Equity income funds 
D) Sector funds 
A) Growth funds 
B) Capital appreciation funds 
C) Equity income funds 
D) Sector funds

Question 7

High yield (junk)bond funds focus on relatively risky bonds issued by firms that are subject to

Accepted Answer

A) default risk. 
B) interest rate risk. 
C) exchange risk. 
D) management risk. 
A) default risk. 
B) interest rate risk. 
C) exchange risk. 
D) management risk.

Question 8

Which of the following bond mutual funds has both the highest default risk and interest rate risk?

Accepted Answer

A) Long-term Treasury 
B) Short-term Ginnie Mae 
C) Short-term corporate 
D) Long-term high-yield 
A) Long-term Treasury 
B) Short-term Ginnie Mae 
C) Short-term corporate 
D) Long-term high-yield

Question 9

Socially responsible mutual funds are those whose managers have taken and passed a strict financial ethics test.

Accepted Answer

A) True 
 B)False

Question 10

If a mutual fund's NAV is $50 and its expense ratio is 2.0 percent,what are the total expenses per share?
(a)$2
(b)$10
(c)$1
(d)$5

Accepted Answer

The answer of If a mutual fund's NAV is $50...

Question 11

Stock brokers typically do not sell no-load funds because

Accepted Answer

A) the return is lower than load funds and they want to sell only the best funds to keep their clients. 
B) they are prohibited by federal law. 
C) the load is usually paid to the broker for selling the shares,therefore,no load,no fee. 
D) there is no secondary market for them. 
A) the return is lower than load funds and they want to sell only the best funds to keep their clients. 
B) they are prohibited by federal law. 
C) the load is usually paid to the broker for selling the shares,therefore,no load,no fee. 
D) there is no secondary market for them.

Question 12

In general,it is prudent to purchase a no-load fund instead of a load fund.

Accepted Answer

A) True 
 B)False

Question 13

List five considerations or characteristics when purchasing a mutual fund.

Accepted Answer

Investment objective,return,expense rati

Question 14

Which of the following stock mutual funds are more established than small-cap firms,but may have less growth potential?

Accepted Answer

A) Equity income 
B) Sector funds 
C) Mid-size capitalization 
D) Balanced growth and income 
A) Equity income 
B) Sector funds 
C) Mid-size capitalization 
D) Balanced growth and income

Question 15

Which of the following funds have the higher potential risk and return?

Accepted Answer

A) Index 
B) Capital appreciation 
C) Income 
D) Growth 
A) Index 
B) Capital appreciation 
C) Income 
D) Growth

Question 16

The net asset value (NAV)is reported in most daily newspapers

Accepted Answer

A) for the total fund. 
B) on a per-share basis. 
C) in dollars and fractions of dollars. 
D) on a weekly basis due to the complexity of computation. 
A) for the total fund. 
B) on a per-share basis. 
C) in dollars and fractions of dollars. 
D) on a weekly basis due to the complexity of computation.

Question 17

In considering various fund characteristics,which of the following should you not consider?

Accepted Answer

A) Minimum investment 
B) Investment objective 
C) Investment company 
D) S & P ratings 
A) Minimum investment 
B) Investment objective 
C) Investment company 
D) S & P ratings

Question 18

A mutual fund must distribute ________ to investors in the same year as earned.

Accepted Answer

A) dividends 
B) profits 
C) capital gains 
D) Both A and C. 
A) dividends 
B) profits 
C) capital gains 
D) Both A and C.

Question 19

Before investing in a mutual fund the very least you should do is

Accepted Answer

A) read the prospectus. 
B) consult an attorney. 
C) open an account with a broker. 
D) consult a certified financial planner. 
A) read the prospectus. 
B) consult an attorney. 
C) open an account with a broker. 
D) consult a certified financial planner.

Question 20

Which of the following is not a source of profits for owners of a stock mutual fund?

Accepted Answer

A) Dividends distributed by the mutual fund 
B) Interest distributed by the mutual fund 
C) Capital gains distributed by the mutual fund 
D) Capital gains from the sale of your shares in the mutual fund 
A) Dividends distributed by the mutual fund 
B) Interest distributed by the mutual fund 
C) Capital gains distributed by the mutual fund 
D) Capital gains from the sale of your shares in the mutual fund

Exam 17: Investing in Mutual Funds

An open-end mutual fund may do all of the following except

What would be the tax consequence of owning a mutual fund that made distributions of $600 resulting from short-term gains and $800 resulting from long-term gains assuming a 30 percent tax bracket and a 10 percent capital gains rate? (a)$420 (b)$140 (c)$300 (d)$260

The difference between an international and a global fund is

Existing shares of closed-end mutual fund companies are purchased

Advantages of investing in mutual funds include all of the following except

Investing in which of the following funds will typically give you the least diversification?

High yield (junk)bond funds focus on relatively risky bonds issued by firms that are subject to

Which of the following bond mutual funds has both the highest default risk and interest rate risk?

Socially responsible mutual funds are those whose managers have taken and passed a strict financial ethics test.

If a mutual fund's NAV is $50 and its expense ratio is 2.0 percent,what are the total expenses per share? (a)$2 (b)$10 (c)$1 (d)$5

Stock brokers typically do not sell no-load funds because

In general,it is prudent to purchase a no-load fund instead of a load fund.

List five considerations or characteristics when purchasing a mutual fund.

Which of the following stock mutual funds are more established than small-cap firms,but may have less growth potential?

Which of the following funds have the higher potential risk and return?

The net asset value (NAV)is reported in most daily newspapers

In considering various fund characteristics,which of the following should you not consider?

A mutual fund must distribute ________ to investors in the same year as earned.

Before investing in a mutual fund the very least you should do is

Which of the following is not a source of profits for owners of a stock mutual fund?

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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