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| 1 | |
An advantage of buying a mutual fund is that you: |
| | A) | Have greater diversification than buying individual stocks. |
| | B) | Have a greater risk than buying individual stocks. |
| | C) | Have less diversification than buying individual stocks. |
| | D) | Can pick the stocks included in your fund. |
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| 2 | |
When a fee is charged to withdraw money from a mutual fund, the mutual fund is a: |
| | A) | No-load fund |
| | B) | Load fund |
| | C) | 12b-1 fund |
| | D) | Contingent deferred sales load fund |
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| 3 | |
The net asset value (NAV) of a mutual fund with a current market value of $750,000,000, liabilities of $6,800,000, and 20,300,000 shares issued is: |
| | A) | $13.50 |
| | B) | $107.31 |
| | C) | $36.61 |
| | D) | $101.25 |
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| 4 | |
An index fund is a mutual fund that is based on: |
| | A) | Municipal bonds |
| | B) | Stocks of companies included in the same index. |
| | C) | Stocks listed on the same exchange |
| | D) | Companies in the same industry |
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| 5 | |
When one investment company manages a group of mutual funds this is called: |
| | A) | A fund of funds |
| | B) | A money market fund |
| | C) | A balanced fund |
| | D) | A family of funds |
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| 6 | |
A reason to choose an index fund over a managed mutual fund is that: |
| | A) | Index funds have lower expense ratios because they do not need to be managed aggressively. |
| | B) | Index funds provide guaranteed returns. . |
| | C) | The dollar value of an index fund does not go down like a managed fund. |
| | D) | An index fund refunds the load fees if it decreases in value. |
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| 7 | |
Information on open-end funds can be found in all of the following places EXCEPT: |
| | A) | Directly from the investment company |
| | B) | In financial publications |
| | C) | On the Nasdaq |
| | D) | In newspapers |
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| 8 | |
Unlike stocks, mutual funds provide ________ on a regular basis. |
| | A) | Guaranteed returns on investments |
| | B) | Capital gain distributions |
| | C) | Protection from losses during an economic crisis |
| | D) | A greater return on investment |
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| 9 | |
A disadvantage of owning a mutual fund over stocks is: |
| | A) | You cannot buy mutual funds in as many places as stocks. |
| | B) | Mutual funds have a lower rate of return than stocks. |
| | C) | There are lower gains since they are split between more people. |
| | D) | You must pay taxes on capital gain distributions when the fund distributes capital gains.. |
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| 10 | |
A reinvestment plan option for mutual funds means that: |
| | A) | Once the fund reaches maturity it is automatically rolled over into a new fund. |
| | B) | Any losses incurred in the fund requires investors to reinvest the sum lost. |
| | C) | Capital gains and dividends are used to buy additional shares in the fund. |
| | D) | Capital gains and dividends are taken by the fund owner to invest in other assets. |
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