Question 1

If a mutual fund's NAV is $50 and its expense ratio is 2%,what are the total expenses per share?

Accepted Answer

A)  $2 
B)  $10 
C)  $1 
D)  $5 
A)  $2 
B)  $10 
C)  $1 
D)  $5

Question 2

Arrange the following five bond funds in order from the lowest return and risk to the highest: long-term global,short-term Treasury,intermediate-term corporate,long-term high-yield,long-term Ginnie Mae.

Accepted Answer

short-term Treasury,intermedia

Question 3

________ funds are mutual funds that attempt to mirror the movements of existing broad market indicators.

Accepted Answer

A)  Internet 
B)  Stock 
C)  Index 
D)  International 
A)  Internet 
B)  Stock 
C)  Index 
D)  International

Question 4

Technology funds focus on technology based firms.Which of the following statements regarding these firms is not true?

Accepted Answer

A)  Many of these firms are relatively young. 
B)  They have a low degree of risk. 
C)  They have potential for high returns. 
D)  They do not have a consistent record of strong performance. 
A)  Many of these firms are relatively young. 
B)  They have a low degree of risk. 
C)  They have potential for high returns. 
D)  They do not have a consistent record of strong performance.

Question 5

International bond funds

Accepted Answer

A)  focus on bonds issued by non-U.S. firms or governments. 
B)  may hold bonds that offer a higher yield than U.S. bonds. 
C)  are subject to exchange rate risk. 
D)  All of the above are correct. 
A)  focus on bonds issued by non-U.S. firms or governments. 
B)  may hold bonds that offer a higher yield than U.S. bonds. 
C)  are subject to exchange rate risk. 
D)  All of the above are correct.

Question 6

When the global financial forecast calls for recession in China and Europe,you should consider investing in

Accepted Answer

A)  a global fund. 
B)  an international fund. 
C)  a domestic large cap fund. 
D)  a global bond fund. 
A)  a global fund. 
B)  an international fund. 
C)  a domestic large cap fund. 
D)  a global bond fund.

Question 7

Which of the following is not a characteristic of a closed-end mutual fund?

Accepted Answer

A)  Once the fund closes the shares of the fund trade on the stock market just like a stock. 
B)  The shares may sell above NAV on the secondary market. 
C)  Investors can easily sell their share back to the fund on a daily basis at NAV. 
D)  The shares may sell below NAV on the secondary market. 
A)  Once the fund closes the shares of the fund trade on the stock market just like a stock. 
B)  The shares may sell above NAV on the secondary market. 
C)  Investors can easily sell their share back to the fund on a daily basis at NAV. 
D)  The shares may sell below NAV on the secondary market.

Question 8

You invested $1,000 in a mutual fund with a 4% load when the NAV was $20 per share.If you sell your shares at an NAV of $24 per share,what is the return on your investment?

Accepted Answer

A)  14.8% 
B)  15.2% 
C)  12.5% 
D)  10.8% 
A)  14.8% 
B)  15.2% 
C)  12.5% 
D)  10.8%

Question 9

When an investment company offers several different mutual funds,its name is printed in bold in the listings in financial newspapers,but individual funds are not listed.

Accepted Answer

A) True 
 B)False

Question 10

The difference between an international and a global fund is

Accepted Answer

A)  global funds invest in both U.S. firms and those of other countries whereas international funds focus on firms outside the United States. 
B)  international funds invest in U.S. firms and those of other counties while global funds invest only in foreign firms. 
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 both U.S. firms and those of other countries whereas international funds focus on firms outside the United States. 
B)  international funds invest in U.S. firms and those of other counties while global funds invest only in foreign firms. 
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 11

Index funds incur ________ expenses and are ________ managed compared to other funds.

Accepted Answer

A)  fewer; not actively 
B)  fewer; actively 
C)  more; not actively 
D)  more; actively 
A)  fewer; not actively 
B)  fewer; actively 
C)  more; not actively 
D)  more; actively

Question 12

Some mutual funds have much higher expenses or expense ratios than others,and this expense can affect your overall returns.

Accepted Answer

A) True 
 B)False

Question 13

Studies on mutual funds have found that load funds perform better than no-load funds.

Accepted Answer

A) True 
 B)False

Question 14

Mutual funds that are traded on stock exchanges are called ________.

Accepted Answer

The answer of Mutual funds that are traded on stock...

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

A stock mutual fund's prospectus typically states that the fund is subject to all of the following risks except

Accepted Answer

A)  market risk. 
B)  general decline in the stock market. 
C)  substantial declines in individual stocks. 
D)  default risk. 
A)  market risk. 
B)  general decline in the stock market. 
C)  substantial declines in individual stocks. 
D)  default risk.

Question 17

To calculate the NAV,the market value of the portfolio less liabilities is divided by the ________ to arrive at a per-share basis.

Accepted Answer

A)  original number of shares 
B)  shares currently issued by the fund 
C)  maximum shares to be issued 
D)  average number of shares in comparable funds 
A)  original number of shares 
B)  shares currently issued by the fund 
C)  maximum shares to be issued 
D)  average number of shares in comparable funds

Question 18

If a mutual fund's performance is the result of conditions in the general stock market,the fund is being affected by the ________ risk.

Accepted Answer

The answer of If a mutual fund's performance is the...

Question 19

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

Question 20

In most cases,the fees charged by load funds go to stockbrokers or other financial advisers who execute transactions for investors.

Accepted Answer

A) True 
 B)False

Exam 17: Investing in Mutual Funds

If a mutual fund's NAV is $50 and its expense ratio is 2%,what are the total expenses per share?

Arrange the following five bond funds in order from the lowest return and risk to the highest: long-term global,short-term Treasury,intermediate-term corporate,long-term high-yield,long-term Ginnie Mae.

________ funds are mutual funds that attempt to mirror the movements of existing broad market indicators.

Technology funds focus on technology based firms.Which of the following statements regarding these firms is not true?

International bond funds

When the global financial forecast calls for recession in China and Europe,you should consider investing in

Which of the following is not a characteristic of a closed-end mutual fund?

You invested $1,000 in a mutual fund with a 4% load when the NAV was $20 per share.If you sell your shares at an NAV of $24 per share,what is the return on your investment?

When an investment company offers several different mutual funds,its name is printed in bold in the listings in financial newspapers,but individual funds are not listed.

The difference between an international and a global fund is

Index funds incur ________ expenses and are ________ managed compared to other funds.

Some mutual funds have much higher expenses or expense ratios than others,and this expense can affect your overall returns.

Studies on mutual funds have found that load funds perform better than no-load funds.

Mutual funds that are traded on stock exchanges are called ________.

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

A stock mutual fund's prospectus typically states that the fund is subject to all of the following risks except

To calculate the NAV,the market value of the portfolio less liabilities is divided by the ________ to arrive at a per-share basis.

If a mutual fund's performance is the result of conditions in the general stock market,the fund is being affected by the ________ risk.

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

In most cases,the fees charged by load funds go to stockbrokers or other financial advisers who execute transactions for investors.

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

Index funds incur expenses and are managed compared to other funds.