Question 1

The most popular form of mutual fund by far are

Accepted Answer

A) money market mutual funds. 
B) equity funds. 
C) bond funds. 
D) REIT's. 
A) money market mutual funds. 
B) equity funds. 
C) bond funds. 
D) REIT's.

Question 2

The trade-off for mutual fund diversification is lower-than-market performance.

Accepted Answer

A) True 
 B)False

Question 3

You purchased 500 shares in a mutual fund for $32 NAV.You elected the dividend reinvestment plan and had all dividend and capital gains distributions reinvested in additional shares.You just closed your account and sold 550 shares for $48 NAV.What was your total return on this investment?

Accepted Answer

A) 24.03% 
B) 34.29% 
C) 50.86% 
D) 65.00% 
A) 24.03% 
B) 34.29% 
C) 50.86% 
D) 65.00%

Question 4

Exchange traded funds are mutual funds that trade on an exchange just like individual securities and can be bought or sold throughout the trading day.

Accepted Answer

A) True 
 B)False

Question 5

A(n)________ is a fixed pool of securities,generally municipal bonds,with each unit representing a proportionate ownership in that pool.

Accepted Answer

A) open-end investment company 
B) closed-end mutual fund 
C) unit investment trust 
D) real estate investment trust 
A) open-end investment company 
B) closed-end mutual fund 
C) unit investment trust 
D) real estate investment trust

Question 6

Tax-exempt money market mutual funds invest in only very short-term municipal debt.

Accepted Answer

A) True 
 B)False

Question 7

A unit investment trust usually invests in ________ and an REIT always invests in ________.

Accepted Answer

A) real estate;agency bonds 
B) real estate;municipal bonds 
C) real estate;load mutual funds 
D) municipal bonds;real estate 
E) municipal bonds;real estate bonds 
A) real estate;agency bonds 
B) real estate;municipal bonds 
C) real estate;load mutual funds 
D) municipal bonds;real estate 
E) municipal bonds;real estate bonds

Question 8

An ETF provides better diversification than investing in individual company stocks.

Accepted Answer

A) True 
 B)False

Question 9

A balanced mutual fund is aimed at investors who want

Accepted Answer

A) steady income to live on. 
B) moderate growth in capital. 
C) moderate stability in their investments. 
D) all of the above. 
E) none of the above. 
A) steady income to live on. 
B) moderate growth in capital. 
C) moderate stability in their investments. 
D) all of the above. 
E) none of the above.

Question 10

Suppose that the current value of all of a mutual fund's holdings is determined to be $750 million.The fund's liabilities are $125 million and it grew at 20% from last year.It currently has 45 million shares outstanding.What is the fund's NAV?

Accepted Answer

A) $12.00 per share 
B) $13.89 per share 
C) $14.40 per share 
D) $16.80 per share 
A) $12.00 per share 
B) $13.89 per share 
C) $14.40 per share 
D) $16.80 per share

Question 11

Which of the following services do ETFs offer?

Accepted Answer

A) Automatic reinvestment of dividends,interest,and capital gains 
B) Bookkeeping and tax help 
C) Phone and Internet switching 
D) All of the above 
E) None of the above 
A) Automatic reinvestment of dividends,interest,and capital gains 
B) Bookkeeping and tax help 
C) Phone and Internet switching 
D) All of the above 
E) None of the above

Question 12

Stock market mutual funds are not very popular and consumers tend to invest in them the least.

Accepted Answer

A) True 
 B)False

Question 13

When you own shares in a mutual fund you make money in which of the following ways?

Accepted Answer

A) As the value of all of the securities held by the mutual fund increase,the value of each mutual fund share also increases. 
B) If a fund receives interest or dividends from its holdings this income is passed on to share holders. 
C) If the fund sells a security for more than it originally paid for it,the shareholders receive this in the form of capital gains. 
D) You receive a portion of the commissions that the fund manager charges for trades. 
E) Only A,B and C are correct. 
A) As the value of all of the securities held by the mutual fund increase,the value of each mutual fund share also increases. 
B) If a fund receives interest or dividends from its holdings this income is passed on to share holders. 
C) If the fund sells a security for more than it originally paid for it,the shareholders receive this in the form of capital gains. 
D) You receive a portion of the commissions that the fund manager charges for trades. 
E) Only A,B and C are correct.

Question 14

Bond funds differ from individual bond purchases in that

Accepted Answer

A) bond funds offer less liquidity than individual bonds. 
B) with a bond fund,you don't get professional management. 
C) the bond fund doesn't mature as individual bonds do. 
D) all of the above. 
A) bond funds offer less liquidity than individual bonds. 
B) with a bond fund,you don't get professional management. 
C) the bond fund doesn't mature as individual bonds do. 
D) all of the above.

Question 15

Which of the following are passed on to fund share holders through 12b-1 fees?

Accepted Answer

A) Commissions 
B) Advertising expenses 
C) Promotional fees 
D) Only B and C 
E) All of the above 
A) Commissions 
B) Advertising expenses 
C) Promotional fees 
D) Only B and C 
E) All of the above

Question 16

The most common and popular form of mutual fund is an open-end mutual fund.

Accepted Answer

A) True 
 B)False

Question 17

Money market mutual funds invest primarily in the stocks of publicly traded companies.

Accepted Answer

A) True 
 B)False

Question 18

All mutual funds carry the same level of diversification and exposure to risk.

Accepted Answer

A) True 
 B)False

Question 19

Zippo Mutual Fund is one of your best performers.It just announced a year-end distribution of $2.50 per share in capital gains and $4.25 in dividends.Assuming the NAV increased from $31.50 to $43.75,calculate your total annual return.

Accepted Answer

A) 60.32% 
B) 46.87% 
C) 26.95% 
D) 24.53% 
A) 60.32% 
B) 46.87% 
C) 26.95% 
D) 24.53%

Question 20

The term "open end" mutual fund means that this type of investment company can issue an unlimited number of ownership shares.

Accepted Answer

A) True 
 B)False

The most popular form of mutual fund by far are

The trade-off for mutual fund diversification is lower-than-market performance.

You purchased 500 shares in a mutual fund for $32 NAV.You elected the dividend reinvestment plan and had all dividend and capital gains distributions reinvested in additional shares.You just closed your account and sold 550 shares for $48 NAV.What was your total return on this investment?

Exchange traded funds are mutual funds that trade on an exchange just like individual securities and can be bought or sold throughout the trading day.

A(n)________ is a fixed pool of securities,generally municipal bonds,with each unit representing a proportionate ownership in that pool.

Tax-exempt money market mutual funds invest in only very short-term municipal debt.

A unit investment trust usually invests in and an REIT always invests in .

An ETF provides better diversification than investing in individual company stocks.

A balanced mutual fund is aimed at investors who want

Suppose that the current value of all of a mutual fund's holdings is determined to be $750 million.The fund's liabilities are $125 million and it grew at 20% from last year.It currently has 45 million shares outstanding.What is the fund's NAV?

Which of the following services do ETFs offer?

Stock market mutual funds are not very popular and consumers tend to invest in them the least.

When you own shares in a mutual fund you make money in which of the following ways?

Bond funds differ from individual bond purchases in that

Which of the following are passed on to fund share holders through 12b-1 fees?

The most common and popular form of mutual fund is an open-end mutual fund.

Money market mutual funds invest primarily in the stocks of publicly traded companies.

All mutual funds carry the same level of diversification and exposure to risk.

Zippo Mutual Fund is one of your best performers.It just announced a year-end distribution of $2.50 per share in capital gains and $4.25 in dividends.Assuming the NAV increased from $31.50 to $43.75,calculate your total annual return.

The term "open end" mutual fund means that this type of investment company can issue an unlimited number of ownership shares.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

Exam 14: Mutual Funds: an Easy Way to Diversify

The most popular form of mutual fund by far are

The trade-off for mutual fund diversification is lower-than-market performance.

You purchased 500 shares in a mutual fund for $32 NAV.You elected the dividend reinvestment plan and had all dividend and capital gains distributions reinvested in additional shares.You just closed your account and sold 550 shares for $48 NAV.What was your total return on this investment?

Exchange traded funds are mutual funds that trade on an exchange just like individual securities and can be bought or sold throughout the trading day.

A(n)________ is a fixed pool of securities,generally municipal bonds,with each unit representing a proportionate ownership in that pool.

Tax-exempt money market mutual funds invest in only very short-term municipal debt.

A unit investment trust usually invests in ________ and an REIT always invests in ________.

An ETF provides better diversification than investing in individual company stocks.

A balanced mutual fund is aimed at investors who want

Suppose that the current value of all of a mutual fund's holdings is determined to be $750 million.The fund's liabilities are $125 million and it grew at 20% from last year.It currently has 45 million shares outstanding.What is the fund's NAV?

Which of the following services do ETFs offer?

Stock market mutual funds are not very popular and consumers tend to invest in them the least.

When you own shares in a mutual fund you make money in which of the following ways?

Bond funds differ from individual bond purchases in that

Which of the following are passed on to fund share holders through 12b-1 fees?

The most common and popular form of mutual fund is an open-end mutual fund.

Money market mutual funds invest primarily in the stocks of publicly traded companies.

All mutual funds carry the same level of diversification and exposure to risk.

Zippo Mutual Fund is one of your best performers.It just announced a year-end distribution of $2.50 per share in capital gains and $4.25 in dividends.Assuming the NAV increased from $31.50 to $43.75,calculate your total annual return.

The term "open end" mutual fund means that this type of investment company can issue an unlimited number of ownership shares.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

A unit investment trust usually invests in and an REIT always invests in .