Question 1

Municipal bond mutual funds are primarily for investors seeking

Accepted Answer

A)  ongoing interest income cash flow. 
B)  income free of federal taxes. 
C)  income free of state taxes. 
D)  Both A and B are correct. 
A)  ongoing interest income cash flow. 
B)  income free of federal taxes. 
C)  income free of state taxes. 
D)  Both A and B are correct.

Question 2

An international stock mutual fund is one that owns shares in companies from the United States and other countries.

Accepted Answer

A) True 
 B)False

Question 3

No-load mutual funds sell directly to investors and charge a somewhat smaller management fee than load funds.

Accepted Answer

A) True 
 B)False

Question 4

The best way to predict a mutual fund's performance is to

Accepted Answer

A)  ask your stockbroker. 
B)  look it up on the Internet. 
C)  look at past performance. 
D)  study the investment strategy as it relates to the current economic conditions. 
A)  ask your stockbroker. 
B)  look it up on the Internet. 
C)  look at past performance. 
D)  study the investment strategy as it relates to the current economic conditions.

Question 5

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 6

In order to maximize diversification it is a good idea to

Accepted Answer

A)  invest in large, mid and small cap domestic mutual funds. 
B)  invest in high quality global bond mutual funds. 
C)  invest in international equity mutual funds. 
D)  invest in all funds mentioned in A, B and C. 
A)  invest in large, mid and small cap domestic mutual funds. 
B)  invest in high quality global bond mutual funds. 
C)  invest in international equity mutual funds. 
D)  invest in all funds mentioned in A, B and C.

Question 7

Index mutual funds tend to have lower expenses than other types of mutual funds.

Accepted Answer

A) True 
 B)False

Question 8

Arrange the following five stock funds in order from the highest risk to the lowest: index fund,capital appreciation fund,technology sector fund,income fund,growth stock fund.

Accepted Answer

technology sector fu

Question 9

Regarding load and no-load mutual funds,

Accepted Answer

A)  load funds usually outperform no-load funds. 
B)  no-load funds perform at least as well as load funds even when the fees are ignored. 
C)  the two types of funds perform about the same considering the fees. 
D)  load funds may be bought directly, whereas no-load funds must be purchased through a broker. 
A)  load funds usually outperform no-load funds. 
B)  no-load funds perform at least as well as load funds even when the fees are ignored. 
C)  the two types of funds perform about the same considering the fees. 
D)  load funds may be bought directly, whereas no-load funds must be purchased through a broker.

Question 10

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

Accepted Answer

A)  sell shares directly to investors. 
B)  charge a fee to buy but not sell shares. 
C)  repurchase shares from investors who want to sell their shares. 
D)  have its shares traded on the New York Stock Exchange. 
A)  sell shares directly to investors. 
B)  charge a fee to buy but not sell shares. 
C)  repurchase shares from investors who want to sell their shares. 
D)  have its shares traded on the New York Stock Exchange.

Question 11

A mutual fund that buys only the stocks of gold mining companies is a good example of a sector fund.

Accepted Answer

A) True 
 B)False

Question 12

Municipal bond funds have tax advantages over other kinds of mutual funds.

Accepted Answer

A) True 
 B)False

Question 13

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 14

If you are investing for the "long-term" and are interested in capital appreciation and comfortable with increased risk levels,you should consider a(n)________ or a(n)________.

Accepted Answer

A)  global bond fund; international bond fund 
B)  growth fund; small cap fund 
C)  international index fund; global index fund 
D)  junk bond fund; domestic equity income fund 
A)  global bond fund; international bond fund 
B)  growth fund; small cap fund 
C)  international index fund; global index fund 
D)  junk bond fund; domestic equity income fund

Question 15

A stock mutual fund that pays higher than normal dividends is called a growth fund.

Accepted Answer

A) True 
 B)False

Question 16

Long term Treasury bonds are considered to be the "risk free" asset in the global financial markets.However,long term Treasury bond funds still bear significant ________ risk.

Accepted Answer

A)  global comparative 
B)  financial 
C)  interest rate 
D)  deflation 
A)  global comparative 
B)  financial 
C)  interest rate 
D)  deflation

Question 17

An arrangement offered by some brokerage firms that enables investors to diversify among various mutual funds and receive summary statement information is called a

Accepted Answer

A)  mutual fund firm. 
B)  mutual fund security. 
C)  mutual fund supermarket. 
D)  mutual fund family. 
A)  mutual fund firm. 
B)  mutual fund security. 
C)  mutual fund supermarket. 
D)  mutual fund family.

Question 18

Index funds are popular for all of the following reasons except

Accepted Answer

A)  their performance relative to other mutual funds. 
B)  they incur low expenses. 
C)  they are not actively managed. 
D)  performance is frequently lower than that of actively managed portfolios. 
A)  their performance relative to other mutual funds. 
B)  they incur low expenses. 
C)  they are not actively managed. 
D)  performance is frequently lower than that of actively managed portfolios.

Question 19

Closed-end mutual funds have a limited number of shares that are sold when the funds are first created; the shares are then resold over the stock exchanges.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

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

Exam 17: Investing in Mutual Funds

Municipal bond mutual funds are primarily for investors seeking

An international stock mutual fund is one that owns shares in companies from the United States and other countries.

No-load mutual funds sell directly to investors and charge a somewhat smaller management fee than load funds.

The best way to predict a mutual fund's performance is to

Existing shares of closed-end mutual fund companies are purchased

In order to maximize diversification it is a good idea to

Index mutual funds tend to have lower expenses than other types of mutual funds.

Arrange the following five stock funds in order from the highest risk to the lowest: index fund,capital appreciation fund,technology sector fund,income fund,growth stock fund.

Regarding load and no-load mutual funds,

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

A mutual fund that buys only the stocks of gold mining companies is a good example of a sector fund.

Municipal bond funds have tax advantages over other kinds of mutual funds.

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

If you are investing for the "long-term" and are interested in capital appreciation and comfortable with increased risk levels,you should consider a(n)________ or a(n)________.

A stock mutual fund that pays higher than normal dividends is called a growth fund.

Long term Treasury bonds are considered to be the "risk free" asset in the global financial markets.However,long term Treasury bond funds still bear significant ________ risk.

An arrangement offered by some brokerage firms that enables investors to diversify among various mutual funds and receive summary statement information is called a

Index funds are popular for all of the following reasons except

Closed-end mutual funds have a limited number of shares that are sold when the funds are first created; the shares are then resold over the stock exchanges.

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

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

Filters

If you are investing for the "long-term" and are interested in capital appreciation and comfortable with increased risk levels,you should consider a(n) or a(n).