Question 1

Melanie Davis is getting ready to purchase shares in a mutual fund.The fund will charge her a sales charge only if she redeems her shares within a stated period of time.What type of shares is she buying?

Accepted Answer

A)  class A
B)  class B
C)  class C
D)  either class A or B
E)  either class B or CF) C) and D)
G) All of the above

Question 2

Norma Rose is buying shares in a mutual fund that only invests in companies from countries other than the United States.What type of mutual is she buying?

Accepted Answer

A)  aggressive growth fund
B)  equity income fund
C)  global fund
D)  international fund
E)  regional fundF) All of the above
G) C) and D)

Question 3

All the different fees and fund operating costs are often referred to as a(n) :

Accepted Answer

A)  investment ratio.
B)  expense ratio.
C)  financial ratio.
D)  expense turnover.
E)  management ratio.F) All of the above
G) B) and E)

Question 4

Another name for a mutual fund that charges a contingent deferred sales load is a class ____________ fund.

Accepted Answer

A)  A
B)  B
C)  C
D)  D
E)  EF) A) and B)
G) None of the above

Question 5

The typical expense ratio for an index fund is:

Accepted Answer

A)  0.50 percent or less.
B)  between 0.50 and 1 percent.
C)  between 1 and 2 percent.
D)  between 2 and 3 percent.
E)  over 5 percent.F) C) and D)
G) A) and E)

Question 6

The New American Enterprise Mutual Fund's portfolio is valued at $120 million.The fund has liabilities of $4 million,and the investment company sponsoring the fund has issued 5,800,000 shares.What is the fund's net asset value?

Accepted Answer

A)  $120
B)  $58
C)  $40
D)  $30
E)  $20F) None of the above
G) A) and E)

Question 7

A mutual fund:

Accepted Answer

A)  is a way of investing in a single stock.
B)  pools the money of many investors-its shareholders-to invest in a variety of securities.
C)  is insured by the FDIC.
D)  is a form of an indirect real estate investment.
E)  is professionally managed so investors need not monitor fund results.F) B) and D)
G) C) and E)

Question 8

Which one of the following statements is false?

Accepted Answer

A)  An exchange-traded fund invests in the stocks or securities contained in a stock or securities index.
B)  With an exchange-traded fund,an investor can purchase as little as one share.
C)  The return on shares in an exchange-traded fund tend to mirror the performance of the index.
D)  A passively-managed exchange-traded fund manager needs to make more decisions than an actively-managed mutual fund manager.
E)  Exchange-traded funds are increasing in popularity.F) C) and D)
G) B) and D)

Question 9

There are more exchange-traded funds than there are open-end mutual funds.

Accepted Answer

A) True 
 B)False

Question 10

The Capitalist Mutual Fund's portfolio is valued at $45 million.The fund has liabilities of $3 million,and the investment company sponsoring the fund has issued 1,600,000 shares.What is the fund's net asset value?

Accepted Answer

A)  $100.00
B)  $26.25
C)  $52.50
D)  $3.75
E)  $1.00F) None of the above
G) A) and E)

Question 11

When one investment company manages a group of mutual funds,it is called a(n) :

Accepted Answer

A)  family of funds.
B)  exchange fund.
C)  diversification fund.
D)  versatility funD.
E)  asset allocation fund.F) A) and C)
G) C) and D)

Question 12

Phyllis Payne is buying shares in a mutual fund that invests in companies with a long history of paying a dividend.What type of mutual fund is she buying?

Accepted Answer

A)  aggressive growth fund
B)  equity income fund
C)  global fund
D)  international fund
E)  regional fundF) A) and B)
G) A) and C)

Question 13

Class C shares,because of their ongoing,higher 12b-1 fees,are often more expensive than Class A or Class B shares over a long period of time.

Accepted Answer

A) True 
 B)False

Question 14

Tisha Elmwood is buying shares in a mutual fund that avoids companies that do harm to people,animals,and the environment.What type of mutual fund is this?

Accepted Answer

A)  socially responsible fund
B)  sector fund
C)  small-cap fund
D)  index fund
E)  growth fundF) All of the above
G) None of the above

Question 15

The turnover ratio of a mutual fund measures the:

Accepted Answer

A)  length of time a manager has been in charge of the fund.
B)  amount of profit the fund earns from one investment period to the next.
C)  number of months the average investor holds the fund before selling.
D)  percentage of a fund's holdings that have changed during a 12-month perioD.
E)  percentage of institutional investors who own the fund.F) B) and C)
G) A) and B)

Question 16

Sharon Taylor uses all of her dividend income and capital gain distributions to purchase additional shares in her mutual fund.Which one of the following plans is she using?

Accepted Answer

A)  regular account transaction
B)  voluntary savings plan
C)  contractual savings plan
D)  reinvestment plan
E)  none of the plans listedF) None of the above
G) A) and E)

Question 17

A contingent deferred sales load is a 1 to 5 percent charge that shareholders pay when they withdraw their investment from a mutual fund.

Accepted Answer

A) True 
 B)False

Question 18

In a newspaper quotation,which one of the following letters would indicate if a mutual fund has a redemption charge?

Accepted Answer

A)  NL
B)  r
C)  p
D)  t
E)  wF) A) and B)
G) C) and D)

Question 19

A 1 to 5 percent fee that investors pay when they withdraw their investment from a mutual fund is called a:

Accepted Answer

A)  withdrawal fee.
B)  12b-1 fee.
C)  contingent deferred sales load.
D)  front-end loaD.
E)  management feE.F) A) and B)
G) D) and E)

Question 20

Which of the following is true?

Accepted Answer

A)  More than 87 million individual Americans own mutual funds.
B)  Nearly half of all U.S.households own mutual funds.
C)  There are more than 12,000 mutual funds available.
D)  By the end of 2009,the combined value of assets held by mutual funds exceeded 12.2 trillion dollars.
E)  all of the other answersF) C) and D)
G) B) and E)

Exam 16: Investing in Mutual Funds

Tisha Elmwood is buying shares in a mutual fund that avoids companies that do harm to people,animals,and the environment.What type of mutual fund is this?

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Which of the following is true?

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Melanie Davis is getting ready to purchase shares in a mutual fund.The fund will charge her a sales charge only if she redeems her shares within a stated period of time.What type of shares is she buying?

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The Capitalist Mutual Fund's portfolio is valued at $45 million.The fund has liabilities of $3 million,and the investment company sponsoring the fund has issued 1,600,000 shares.What is the fund's net asset value?

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A mutual fund:

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Phyllis Payne is buying shares in a mutual fund that invests in companies with a long history of paying a dividend.What type of mutual fund is she buying?

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Sharon Taylor uses all of her dividend income and capital gain distributions to purchase additional shares in her mutual fund.Which one of the following plans is she using?

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The typical expense ratio for an index fund is:

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All the different fees and fund operating costs are often referred to as a(n) :

Correct AnswerverifiedShow Answer

A contingent deferred sales load is a 1 to 5 percent charge that shareholders pay when they withdraw their investment from a mutual fund.

Correct AnswerverifiedShow Answer

Which one of the following statements is false?

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Norma Rose is buying shares in a mutual fund that only invests in companies from countries other than the United States.What type of mutual is she buying?

Correct AnswerverifiedShow Answer

The turnover ratio of a mutual fund measures the:

Correct AnswerverifiedShow Answer

Class C shares,because of their ongoing,higher 12b-1 fees,are often more expensive than Class A or Class B shares over a long period of time.

Correct AnswerverifiedShow Answer

When one investment company manages a group of mutual funds,it is called a(n) :

Correct AnswerverifiedShow Answer

Another name for a mutual fund that charges a contingent deferred sales load is a class ____________ fund.

Correct AnswerverifiedShow Answer

In a newspaper quotation,which one of the following letters would indicate if a mutual fund has a redemption charge?

Correct AnswerverifiedShow Answer

A 1 to 5 percent fee that investors pay when they withdraw their investment from a mutual fund is called a:

Correct AnswerverifiedShow Answer

There are more exchange-traded funds than there are open-end mutual funds.

Correct AnswerverifiedShow Answer

The New American Enterprise Mutual Fund's portfolio is valued at $120 million.The fund has liabilities of $4 million,and the investment company sponsoring the fund has issued 5,800,000 shares.What is the fund's net asset value?

Correct AnswerverifiedShow Answer

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