Question 1

Which one of the following publications does not provide readers with information about mutual funds?

Accepted Answer

A)  Business Week
B)  Current Business Survey
C)  Forbes
D)  Kiplinger's Personal Finance Magazine
E)  Money

Question 2

Asset allocation funds invest in various asset classes including stocks,bonds,fixed-income securities,and money market instruments.

Accepted Answer

A) True 
 B)False

Question 3

The major reasons why investors purchase mutual funds are professional management and diversification.

Accepted Answer

A) True 
 B)False

Question 4

Describe either the purchase options or withdrawal options that can be used to invest in or withdraw money from the investment company that sponsors an open- end mutual fund.

Accepted Answer

To purchase shares in an open-end mutual...

Question 5

A mutual fund that provides tax-exempt interest income is referred to as a long- term U.S.bond fund.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is false?

Accepted Answer

A)  The purpose of investing in a closed-end,exchange-traded fund or open-end mutual fund is to earn a financial return.
B)  Income dividends are the earnings that a fund pays to shareholders from its dividend and interest income.
C)  Capital gain distributions are the payments made to a fund's shareholders that result from the sale of securities in the fund's portfolio.
D)  The only way to make money on a mutual fund is by selling shares at a higher price than was initially paid for them.
E)  All of the above statements are truE.

Question 7

Why do investors purchase mutual funds instead of purchasing stocks,bonds,or other investments on their own?

Accepted Answer

The major reasons why investors purchase...

Question 8

Contingent deferred sales loads may also be referred to as ____ loads.

Accepted Answer

A)  front-end
B)  back-end
C)  level
D)  purchase
E)  investiture

Question 9

Martin Campbell wants to invest in mutual funds,but is also worried about diversification.Which fund would you recommend to him?

Accepted Answer

A)  income fund.
B)  long-term corporate bond fund.
C)  U.S.government bond fund.
D)  midcap funD.
E)  a fund of funds.

Question 10

A mutual fund that invests in stocks issued by companies with a long history of paying dividends is called a(n) ____________ fund.

Accepted Answer

A)  balanced
B)  equity income
C)  industry
D)  sector
E)  money market

Question 11

Which type of mutual fund invests primarily in high-yield,high-risk corporate bonds?

Accepted Answer

A)  junk bond fund
B)  intermediate corporate bond fund
C)  municipal bond fund
D)  short-term government bond fund
E)  world bond fund

Question 12

In a newspaper quotation,the letter "p" means a 12b-1 distribution fee is charged.

Accepted Answer

A) True 
 B)False

Question 13

A mutual fund in which investors pay a commission every time they purchase shares is called a(n) ____________ fund.

Accepted Answer

A)  closed-end
B)  open-end
C)  load
D)  no-load
E)  convertible

Question 14

Many financial planners recommend that investors pick a mutual fund with an expense ratio that is:

Accepted Answer

A)  1 percent or less.
B)  between 1 and 2 percent.
C)  between 2 and 3 percent.
D)  between 3 and 4 percent.
E)  over 4 percent.

Question 15

A no-load fund is a mutual fund in which no sales charge is paid by the individual investor to buy or sell shares.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  annual report.
B)  12b-1 report.
C)  annual prospectus.
D)  annual summary report from the president of the investment company.
E)  copy of the annual mutual funds report containing a summary of the professional advisory services comments.

Question 17

There are about _____ exchange-traded funds.

Accepted Answer

A)  25
B)  50
C)  150
D)  775
E)  1,000

Question 18

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 19

Which one 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.

Question 20

According to The Investment Company website,the percentage of investors who purchased their first fund through a retirement plan is:

Accepted Answer

A)  less than 10%.
B)  less than 25%.
C)  less than 50%.
D)  more than 50%.
E)  more than 90%.

Exam 16: Investing in Mutual Funds

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

Correct AnswerverifiedShow Answer

There are about _____ exchange-traded funds.

Correct AnswerverifiedShow Answer

Which type of mutual fund invests primarily in high-yield,high-risk corporate bonds?

Correct AnswerverifiedShow Answer

Why do investors purchase mutual funds instead of purchasing stocks,bonds,or other investments on their own?

Correct AnswerverifiedThe major reasons why investors purchase...View AnswerShow Answer

A mutual fund in which investors pay a commission every time they purchase shares is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

Many financial planners recommend that investors pick a mutual fund with an expense ratio that is:

Correct AnswerverifiedShow Answer

Asset allocation funds invest in various asset classes including stocks,bonds,fixed-income securities,and money market instruments.

Correct AnswerverifiedShow Answer

The major reasons why investors purchase mutual funds are professional management and diversification.

Correct AnswerverifiedShow Answer

Which one of the following statements is false?

Correct AnswerverifiedShow Answer

A no-load fund is a mutual fund in which no sales charge is paid by the individual investor to buy or sell shares.

Correct AnswerverifiedShow Answer

Martin Campbell wants to invest in mutual funds,but is also worried about diversification.Which fund would you recommend to him?

Correct AnswerverifiedShow Answer

Contingent deferred sales loads may also be referred to as ____ loads.

Correct AnswerverifiedShow Answer

A mutual fund that invests in stocks issued by companies with a long history of paying dividends is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

Which one of the following publications does not provide readers with information about mutual funds?

Correct AnswerverifiedShow Answer

A mutual fund that provides tax-exempt interest income is referred to as a long- term U.S.bond fund.

Correct AnswerverifiedShow Answer

In a newspaper quotation,the letter "p" means a 12b-1 distribution fee is charged.

Correct AnswerverifiedShow Answer

According to The Investment Company website,the percentage of investors who purchased their first fund through a retirement plan is:

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

Describe either the purchase options or withdrawal options that can be used to invest in or withdraw money from the investment company that sponsors an open- end mutual fund.

Correct AnswerverifiedTo purchase shares in an open-end mutual...View AnswerShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

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The major reasons why investors purchase...
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A load fund is a mutual fund in which in...
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To purchase shares in an open-end mutual...
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