Question 1

Investors in both closed-end and open-end funds can make money by purchasing shares at a low price and then selling them at a higher price.

Accepted Answer

A) True 
 B)False

Question 2

When Peter Mills went to withdraw $8,000 from the Lowe Fidelity Mutual fund, he was informed that the fund would charge 3 percent of the amount withdrawn. What is the dollar amount of the withdrawal charge?

Accepted Answer

A)   $2,400
B)   $500
C)   $240
D)   $24
E)   It is impossible to calculate the withdrawal charge with this information.F) All of the above
G) B) and E)

Question 3

Explain the difference between a load fund and a no-load fund. From a performance standpoint, is there a significant difference between mutual funds that charge commissions and those that do not?

Accepted Answer

A load fund is a mutual fund in which in...

Question 4

A mutual fund designed for investors who are looking for a tax-efficient income stream without trading in capital gains is called a(n)  __________ fund.

Accepted Answer

A)   closed-end
B)   T-series
C)   exchange-traded
D)   index
E)   convertibleF) B) and E)
G) B) and D)

Question 5

A mutual fund that seeks to achieve a high level of income and liquidity through investment in short-term money market instruments, such as T-bills, commercial paper, and short-term government bonds is __________________

Accepted Answer

A)   a balanced asset allocation fund
B)   a money market fund
C)   an equity or common stock fund
D)   a specialty fund
E)   an ethical fundF) D) and E)
G) B) and C)

Question 6

A mutual fund that aims for long-term growth through capital appreciation and the reinvestment of income by investing in income producing real property is __________________

Accepted Answer

A)   a balanced asset allocation fund
B)   a money market fund
C)   an equity or common stock fund
D)   a real estate mutual fund
E)   an ethical fundF) All of the above
G) A) and E)

Question 7

With a mutual fund you can diversify your holdings by buying a mutual fund that owns stock in hundreds of different companies.

Accepted Answer

A) True 
 B)False

Question 8

Most Canadian mutual funds sponsored by the Canadian chartered banks __________________

Accepted Answer

A)   charge an annual management expense ratio (MER) 
B)   are no-load funds
C)   Both (a)  and (b) .
D)   Neither (a)  nor (b) .E) All of the above
F) A) and D)

Question 9

In a newspaper quotation, the letter "N" means no load.

Accepted Answer

A) True 
 B)False

Question 10

During 2000, Lianne Majoro received income dividends of $850 and capital gain distributions of $540. The tax consequence is that

Accepted Answer

A)   both amounts must be included as taxable income.
B)   only the dividends are taxable.
C)   only the capital gains are taxable.
D)   both amounts are tax exempt.
E)   It is impossible to determine the tax consequences for dividend income and capital gain distributions unless the shares of the mutual fund are sold to another investor.F) B) and C)
G) All of the above

Question 11

As a shareholder in a mutual fund, you should receive a(n)

Accepted Answer

A)   annual report.
B)   quarterly report.
C)   redemption fee sheet.
D)   letter from the president of the investment company that details what the fund's objectives are.
E)   copy of the annual mutual funds evaluation provided by Changing Times magazine.F) A) and C)
G) A) and B)

Question 12

The Capitalist Mutual Fund's portfolio is valued at $55 million. The fund has liabilities of $4 million, and the investment company sponsoring the fund has issued 2,400,000 shares. What is the fund's net asset value?

Accepted Answer

A)   $100
B)   $21.25
C)   $22.91
D)   $24.58
E)   $1F) A) and B)
G) A) and C)

Question 13

The value of the mutual fund's portfolio minus the mutual fund's liabilities divided by the number of shares outstanding is called the:

Accepted Answer

A)   net asset value.
B)   outstanding balance.
C)   per share value.
D)   book value.
E)   accounting value.F) C) and D)
G) B) and D)

Question 14

Which of the following statements is false?

Accepted Answer

A)   The responsibility for choosing the right mutual fund rests with the individual investor.
B)   Professional fund managers do make mistakes.
C)   Although investing in mutual funds provides professional management, individual investors should continually evaluate their mutual fund investments.
D)   There is no need to evaluate mutual fund investments because investment companies hire the best professional managers they can to manage their funds.
E)   Individual investors should be involved in choosing a mutual fund because they know how the objectives of a mutual fund match their own investment objectives.F) D) and E)
G) C) and E)

Question 15

A closed-end fund is a mutual fund in which shares are issued only when the fund is organized.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true?

Accepted Answer

A)   Real estate funds offered by insurance companies as an alternative to conventional mutual funds.
B)   Bond funds seek to achieve a high level of income and liquidity.
C)   Mortgage funds have a higher risk then bond funds.
D)   Ethical funds are typically guided by moral criteria.
E)   Segregated funds are often considered a subset of specialty funds.F) C) and D)
G) All of the above

Question 17

Which of the following statements is false?

Accepted Answer

A)   Investors purchase mutual funds for diversification.
B)   Investors purchase mutual funds because of professional management.
C)   Investors who purchase mutual funds are guaranteed a higher rate of return than a comparable investment in stocks or bonds.
D)   Professional mutual fund managers work for an investment company.
E)   Even the best portfolio managers sometimes make mistakes.F) A) and C)
G) D) and E)

Question 18

An affordable way for investors to invest in a diversified basket of securities; constructed to track the components of a market index such as the S&P 500 or the S&P/TSX Composite is with a(n)  ____________ fund.

Accepted Answer

A)   closed-end
B)   open-end
C)   exchange-traded
D)   index
E)   convertibleF) B) and C)
G) A) and B)

Question 19

The Jeremiah Wazan Enterprise Mutual Fund's portfolio is valued at $125,000,000. The fund has liabilities of $5,000,000, and the investment company sponsoring the fund has issued 2,000,000 shares. What is the fund's net asset value?

Accepted Answer

A)   $125
B)   $58
C)   $50
D)   $25
E)   $60F) A) and D)
G) C) and D)

Question 20

A mutual fund in which no sales charge is paid by the individual investor is called a(n)  ____________ fund.

Accepted Answer

A)   closed-end
B)   open-end
C)   load
D)   no-load
E)   convertible fund.F) A) and E)
G) None of the above

Exam 13: Investing in Mutual Funds

During 2000, Lianne Majoro received income dividends of $850 and capital gain distributions of $540. The tax consequence is that

Correct AnswerverifiedShow Answer

The Capitalist Mutual Fund's portfolio is valued at $55 million. The fund has liabilities of $4 million, and the investment company sponsoring the fund has issued 2,400,000 shares. What is the fund's net asset value?

Correct AnswerverifiedShow Answer

A mutual fund designed for investors who are looking for a tax-efficient income stream without trading in capital gains is called a(n) __________ fund.

Correct AnswerverifiedShow Answer

A closed-end fund is a mutual fund in which shares are issued only when the fund is organized.

Correct AnswerverifiedShow Answer

As a shareholder in a mutual fund, you should receive a(n)

Correct AnswerverifiedShow Answer

In a newspaper quotation, the letter "N" means no load.

Correct AnswerverifiedShow Answer

A mutual fund that aims for long-term growth through capital appreciation and the reinvestment of income by investing in income producing real property is __________________

Correct AnswerverifiedShow Answer

When Peter Mills went to withdraw $8,000 from the Lowe Fidelity Mutual fund, he was informed that the fund would charge 3 percent of the amount withdrawn. What is the dollar amount of the withdrawal charge?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Explain the difference between a load fund and a no-load fund. From a performance standpoint, is there a significant difference between mutual funds that charge commissions and those that do not?

Correct AnswerverifiedA load fund is a mutual fund in which in...View AnswerShow Answer

The Jeremiah Wazan Enterprise Mutual Fund's portfolio is valued at $125,000,000. The fund has liabilities of $5,000,000, and the investment company sponsoring the fund has issued 2,000,000 shares. What is the fund's net asset value?

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

An affordable way for investors to invest in a diversified basket of securities; constructed to track the components of a market index such as the S&P 500 or the S&P/TSX Composite is with a(n) ____________ fund.

Correct AnswerverifiedShow Answer

The value of the mutual fund's portfolio minus the mutual fund's liabilities divided by the number of shares outstanding is called the:

Correct AnswerverifiedShow Answer

A mutual fund that seeks to achieve a high level of income and liquidity through investment in short-term money market instruments, such as T-bills, commercial paper, and short-term government bonds is __________________

Correct AnswerverifiedShow Answer

Most Canadian mutual funds sponsored by the Canadian chartered banks __________________

Correct AnswerverifiedShow Answer

A mutual fund in which no sales charge is paid by the individual investor is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

With a mutual fund you can diversify your holdings by buying a mutual fund that owns stock in hundreds of different companies.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Investors in both closed-end and open-end funds can make money by purchasing shares at a low price and then selling them at a higher price.

Correct AnswerverifiedShow Answer

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A load fund is a mutual fund in which in...
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