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Exam 14: Mutual Funds: An Easy Way to Diversify

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Question 61

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A bond mutual fund is an appropriate choice for an investor with an income goal.

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Question 62

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Former hedge fund manager Bernie Madoff ran a Ponzi scheme,in which he took money from new investors and used that money to pay earlier investors,all the while pocketing most of the money for himself.In the end,Madoff lost around ________ of his investors' money and ended up behind bars."

A) $100 million
B) $5 billion
C) $25 billion
D) $50 billion

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Question 63

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Because mutual funds trade in such large quantities,they pay far more in terms of commissions.

One of the advantages of municipal bond funds is that

One of the most valuable mutual fund services available is automatic reinvestment of cash flows.

Mutual funds give smaller investors the same ability to diversify and reduce risk as big investors with a great deal of money have.

By law,all mutual funds must be broadly diversified.

A sector fund is a mutual fund that tries to maximize the degree of diversification.

Bernie has followed the three steps to begin mutual fund investing and is ready to make the purchase.What are his choices in buying?

At the beginning of 2014,bond funds-including both municipal and taxable bond funds-made up the largest segment of the $279 billion closed-end fund market.

To obtain information about mutual funds you must always pay a fee.

For your investment program,you have occasionally been holding a few stocks that you purchased from various brokers.Based on this,which advantages of mutual funds would be appealing to you?

What does the following mathematical expression yield? (total market value of all securities - liabilities) divided by (total shares outstanding) =

An ETF provides similar services to an investor to those that a mutual fund investment provides.

Why are stock mutual funds so popular? Briefly outline the highlights of each type of fund.

"Classes" of mutual funds have different fee arrangements attached to them.

A closed-end fund trades more like common stock than a mutual fund.

Investment companies are required by law to offer a prospectus to prospective investors.Let your instructor know which 5 parts you think are the most important and why.

You purchased 100 shares of a fund for $15.50 per share.Its current NAV is 20.75 per share.There were no distributions.What is your total return?

What sources of information does Art Keown,your textbook author,recommend when researching mutual fund investing?