Question 1

A "good" fund manager has the ability to increase the share value when the economy is good and retain that value when the economy is bad.

Accepted Answer

A) True 
 B)False

Question 2

Fred wants to invest in a "no-load" fund.This means that the fund has no 12b-1 fees.

Accepted Answer

A) True 
 B)False

Question 3

A problem with mutual funds is

Accepted Answer

A)   Professional management.
B)   The possibility to eliminate taxes if held in a Roth individual retirement account.
C)   Being required to report reinvested income dividends and capital gain distributions on your federal tax return.
D)   Tax deferral if the fund is held in a retirement account like a 401(k)  account.
E)   The diversification offered to investors.

Question 4

What are three ways that a shareholder can receive a return from a mutual fund?

Accepted Answer

Income dividends,cap...

Question 5

A family of funds is a grouping of funds that all invest in bonds or all invest in stocks.

Accepted Answer

A) True 
 B)False

Question 6

Professional advisory services provide research on mutual funds in all of the following areas except

Accepted Answer

A)   A historical profile.
B)   Statistical information.
C)   Performance, risk analysis, and portfolio analysis.
D)   Summary of the analyst's research.
E)   All of these are included by professional advisory services.

Question 7

How is an ETF similar to a closed-end fund?

Accepted Answer

A)   Shares are traded on a securities exchange or in the over-the-counter market.
B)   An investor can purchase as little as one share of a fund.
C)   Prices are determined by supply and demand and the value of stocks and other investments contained in the portfolio.
D)   Prices are determined by investor expectations.
E)   All of these are correct.

Question 8

The investments in the Already Been Counted Fund have a current market value of $600 million.The fund also has liabilities that total $40 million.If this mutual fund has 25 million shares,what is the net asset value per share?

Accepted Answer

A)   $1.60.
B)   $22.40.
C)   $24.00.
D)   $25.60.
E)   None of these.

Question 9

How is an index fund different from other mutual funds?

Accepted Answer

An index fund has a manager; however,his...

Question 10

Whose shares are issued and redeemed by the investment company at the request of investors?

Accepted Answer

A)   Closed-end fund
B)   Exchange-traded fund
C)   Net asset value fund
D)   No-load fund
E)   Open-end fund

Question 11

Identify three items that should be found in a mutual fund prospectus.

Accepted Answer

A prospectus includes
• The fund's objec...

Question 12

Val wants to invest in a fund whose primary objective is to conserve principal,provide income,and provide long-term growth.Which of the following will best meet her needs?

Accepted Answer

A)   Cyclical funds
B)   Balanced funds
C)   Junk bond funds
D)   Midcap funds
E)   Short-term corporate bond funds

Question 13

Knowing what we know now,if you were an investor in 2007,what changes would you have made to your mutual fund investments to minimize your losses in the economic crisis that followed?

Accepted Answer

If you would have known that a...

Question 14

List and explain five types of stock funds.

Accepted Answer

All of the following are stock funds:
• ...

Question 15

Which of the following types of stock funds invests in the same companies included in the Standard & Poor's 500 stock index?

Accepted Answer

A)   Equity income funds
B)   Growth funds
C)   Index funds
D)   International funds
E)   Regional funds

Question 16

An example of a lifecycle fund is a fund that

Accepted Answer

A)   Assists investors with planning for retirement by a specific date.
B)   Initially invests in conservative securities, then changes to invest in more risk-oriented securities as time goes by.
C)   Invests in shares of other mutual funds in order to increase diversification and asset allocation.
D)   Has principal protection as its main objective.
E)   None of these is an example of a lifecycle fund.

Question 17

Which of the following is true about mutual funds and taxes?

Accepted Answer

A)   Capital gain distributions are taxed when you sell your shares.
B)   Income dividends are taxed quarterly.
C)   Investment companies are required to send each shareholder a year-end statement that specifies how much each received in dividends and capital gain distributions.
D)   Capital gains distributions are not taxed.
E)   Taxes can be eliminated if you hold your mutual fund shares in your 401(k)  retirement account.

Question 18

When you think about good and bad economic times,what are the responsibilities of a "good" fund manager?

Accepted Answer

A good fund manager has the ab...

Question 19

Nicholas purchased 150 shares of ABC Mutual Fund at $10.50 and sold them one year later at a price of $14.50.His total earnings were

Accepted Answer

A)   $400
B)   $600
C)   $2,025
D)   $2,625
E)   $4,650

Question 20

The net asset value is calculated as

Accepted Answer

A)   (Liabilities - Value of portfolio)  + Number of shares outstanding.
B)   Number of shares outstanding/(Liabilities - Value of portfolio) .
C)   (Liabilities - Value of portfolio) /Number of shares outstanding.
D)   (Current market value of portfolio - Liabilities) /Number of shares outstanding.
E)   Number of shares outstanding/(Value of portfolio - Liabilities) .

Exam 13: Investing in Mutual Funds

A "good" fund manager has the ability to increase the share value when the economy is good and retain that value when the economy is bad.

Correct AnswerverifiedShow Answer

A problem with mutual funds is

Correct AnswerverifiedShow Answer

Nicholas purchased 150 shares of ABC Mutual Fund at $10.50 and sold them one year later at a price of $14.50.His total earnings were

Correct AnswerverifiedShow Answer

Fred wants to invest in a "no-load" fund.This means that the fund has no 12b-1 fees.

Correct AnswerverifiedShow Answer

Knowing what we know now,if you were an investor in 2007,what changes would you have made to your mutual fund investments to minimize your losses in the economic crisis that followed?

Correct AnswerverifiedIf you would have known that a...View AnswerShow Answer

Val wants to invest in a fund whose primary objective is to conserve principal,provide income,and provide long-term growth.Which of the following will best meet her needs?

Correct AnswerverifiedShow Answer

Professional advisory services provide research on mutual funds in all of the following areas except

Correct AnswerverifiedShow Answer

Identify three items that should be found in a mutual fund prospectus.

Correct AnswerverifiedA prospectus includes• The fund's objec...View AnswerShow Answer

A family of funds is a grouping of funds that all invest in bonds or all invest in stocks.

Correct AnswerverifiedShow Answer

An example of a lifecycle fund is a fund that

Correct AnswerverifiedShow Answer

What are three ways that a shareholder can receive a return from a mutual fund?

Correct AnswerverifiedIncome dividends,cap...View AnswerShow Answer

Which of the following is true about mutual funds and taxes?

Correct AnswerverifiedShow Answer

When you think about good and bad economic times,what are the responsibilities of a "good" fund manager?

Correct AnswerverifiedA good fund manager has the ab...View AnswerShow Answer

List and explain five types of stock funds.

Correct AnswerverifiedAll of the following are stock funds:• ...View AnswerShow Answer

The investments in the Already Been Counted Fund have a current market value of $600 million.The fund also has liabilities that total $40 million.If this mutual fund has 25 million shares,what is the net asset value per share?

Correct AnswerverifiedShow Answer

The net asset value is calculated as

Correct AnswerverifiedShow Answer

How is an index fund different from other mutual funds?

Correct AnswerverifiedAn index fund has a manager; however,his...View AnswerShow Answer

How is an ETF similar to a closed-end fund?

Correct AnswerverifiedShow Answer

Whose shares are issued and redeemed by the investment company at the request of investors?

Correct AnswerverifiedShow Answer

Which of the following types of stock funds invests in the same companies included in the Standard & Poor's 500 stock index?

Correct AnswerverifiedShow Answer

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If you would have known that a...
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A prospectus includes
• The fund's objec...
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Income dividends,cap...
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A good fund manager has the ab...
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All of the following are stock funds:
• ...
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An index fund has a manager; however,his...
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