Question 1

High yield bond funds have a ________ potential return and ________ risk.

Accepted Answer

A)  high; low 
B)  high; high 
C)  low; high 
D)  low; low 
A)  high; low 
B)  high; high 
C)  low; high 
D)  low; low

Question 2

Corporate bond funds focus on bonds issued by high-quality firms and,therefore,tend to have a low degree of default risk.

Accepted Answer

A) True 
 B)False

Question 3

Stocks that performed well in one quarter will not necessarily perform well in another quarter.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following characteristics is not true of closed-end funds?

Accepted Answer

A)  They can be load or no-load funds. 
B)  They do not repurchase shares from investors. 
C)  They are bought and sold on stock exchanges. 
D)  They may sell above or below NAV. 
A)  They can be load or no-load funds. 
B)  They do not repurchase shares from investors. 
C)  They are bought and sold on stock exchanges. 
D)  They may sell above or below NAV.

Question 5

Capital appreciation funds are mutual funds that focus on stocks that are expected to grow at a very high rate.

Accepted Answer

A) True 
 B)False

Question 6

Hedge funds,which are not regulated by the Securities and Exchange Commission,are only available to wealthy investors and are less risky than ordinary mutual funds.

Accepted Answer

A) True 
 B)False

Question 7

Because a mutual fund is already diversified with perhaps 100 or more different investments,further diversification is not recommended or necessary.

Accepted Answer

A) True 
 B)False

Question 8

The price of shares in a mutual fund is referred to as the ________.

Accepted Answer

The answer of The price of shares in a mutual...

Question 9

Investing in one of 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 10

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 11

Which of the following is a stock mutual fund?

Accepted Answer

A)  Ginnie Mae fund 
B)  Growth fund 
C)  Municipal securities fund 
D)  Treasury securities fund 
A)  Ginnie Mae fund 
B)  Growth fund 
C)  Municipal securities fund 
D)  Treasury securities fund

Question 12

Use the following two columns of items to answer the matching questions below:
-expense ratio

Accepted Answer

A) funds that sell shares directly to investors and repurchase the shares when investors wish to sell them 
B) annual expenses per share divided by the net asset value of a mutual fund 
C) funds that sell directly to investors and do not charge a fee 
D) amount by which a closed-end fund's share price in the secondary market is above the fund's NAV 
E) market value of the securities that a mutual fund has purchased minus any liabilities owed 
A) funds that sell shares directly to investors and repurchase the shares when investors wish to sell them 
B) annual expenses per share divided by the net asset value of a mutual fund 
C) funds that sell directly to investors and do not charge a fee 
D) amount by which a closed-end fund's share price in the secondary market is above the fund's NAV 
E) market value of the securities that a mutual fund has purchased minus any liabilities owed

Question 13

In assessing different mutual funds,the returns vary,but the expenses are fixed.

Accepted Answer

A) True 
 B)False

Question 14

There is no limit on the number of open-end mutual fund shares that a company can offer.

Accepted Answer

A) True 
 B)False

Question 15

An investor who wants to invest in a particular sector but does not have strong opinions about which stocks to purchase within that sector would be likely to choose a(n)

Accepted Answer

A)  balanced growth and income fund. 
B)  mid-cap fund. 
C)  exchange-traded fund that represents that particular sector. 
D)  growth fund. 
A)  balanced growth and income fund. 
B)  mid-cap fund. 
C)  exchange-traded fund that represents that particular sector. 
D)  growth fund.

Question 16

The difference between stock mutual funds and bond mutual funds lies in the percentage of stocks and bonds that each fund purchases.

Accepted Answer

A) True 
 B)False

Question 17

When you begin to save for retirement and general wealth building,it is wise to invest in mutual funds because

Accepted Answer

A)  they provide instant diversification. 
B)  they are less expensive than brokers. 
C)  they generally do not decrease in value. 
D)  All of the above are correct. 
A)  they provide instant diversification. 
B)  they are less expensive than brokers. 
C)  they generally do not decrease in value. 
D)  All of the above are correct.

Question 18

The susceptibility of a mutual fund's performance to general stock market conditions is known as

Accepted Answer

A)  interest rate risk. 
B)  market risk. 
C)  exchange risk. 
D)  corporate risk. 
A)  interest rate risk. 
B)  market risk. 
C)  exchange risk. 
D)  corporate risk.

Question 19

Two advantages of investing in mutual funds are diversification and professional management.

Accepted Answer

A) True 
 B)False

Question 20

Choosing a mutual fund or an investment company involves reviewing past performance and also comparing fees and expenses charged.

Accepted Answer

A) True 
 B)False

Exam 17: Investing in Mutual Funds

High yield bond funds have a ________ potential return and ________ risk.

Corporate bond funds focus on bonds issued by high-quality firms and,therefore,tend to have a low degree of default risk.

Stocks that performed well in one quarter will not necessarily perform well in another quarter.

Which of the following characteristics is not true of closed-end funds?

Capital appreciation funds are mutual funds that focus on stocks that are expected to grow at a very high rate.

Hedge funds,which are not regulated by the Securities and Exchange Commission,are only available to wealthy investors and are less risky than ordinary mutual funds.

Because a mutual fund is already diversified with perhaps 100 or more different investments,further diversification is not recommended or necessary.

The price of shares in a mutual fund is referred to as the ________.

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

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

Which of the following is a stock mutual fund?

Use the following two columns of items to answer the matching questions below: -expense ratio

In assessing different mutual funds,the returns vary,but the expenses are fixed.

There is no limit on the number of open-end mutual fund shares that a company can offer.

An investor who wants to invest in a particular sector but does not have strong opinions about which stocks to purchase within that sector would be likely to choose a(n)

The difference between stock mutual funds and bond mutual funds lies in the percentage of stocks and bonds that each fund purchases.

When you begin to save for retirement and general wealth building,it is wise to invest in mutual funds because

The susceptibility of a mutual fund's performance to general stock market conditions is known as

Two advantages of investing in mutual funds are diversification and professional management.

Choosing a mutual fund or an investment company involves reviewing past performance and also comparing fees and expenses charged.

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

High yield bond funds have a potential return and risk.