Question 1

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 fundF) A) and E)
G) None of the above

Question 2

The Capitalist Mutual Fund's portfolio is valued at $45 million. The fund has liabilities of $3 million, and the investment company sponsoring the fund has issued 1,600,000 shares. What is the fund's net asset value?

Accepted Answer

A)   $100.00
B)   $26.25
C)   $52.50
D)   $3.75
E)   $1.00F) A) and B)
G) D) 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

For a load fund, the average commission usually ranges between 3 and 5 percent of the purchase price.

Accepted Answer

A) True 
 B)False

Question 5

Income dividends are the earnings a fund pays to shareholders from its dividend and interest income.

Accepted Answer

A) True 
 B)False

Question 6

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)   MoneyF) All of the above
G) C) and D)

Question 7

High-yield bond funds are sometimes referred to as junk bond funds.

Accepted Answer

A) True 
 B)False

Question 8

A mutual fund that invests in common stocks of rapidly growing corporations with higher-than-average revenue and earnings growth is called a(n)  ____________ fund.

Accepted Answer

A)   balanced
B)   growth
C)   industry
D)   income
E)   money marketF) A) and B)
G) A) and C)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following statements is false?

Accepted Answer

A)   Many investors have found a wealth of information about mutual fund investments on the internet.
B)   It is possible to obtain market values for a mutual fund by using the internet.
C)   Most investment companies that sponsor mutual funds have a web page.
D)   Professional advisory services are prohibited from discussing mutual funds on their web pages.
E)   A mutual fund's website will provide information about how to open an account, current market quotes, and specific fund information.F) C) and D)
G) D) and E)

Question 11

Bob Newsome purchased 250 shares of the Northern Lights Growth Fund. The purchase cost was $30 per share. If this fund charges a 3 percent load, what is the commission amount he will pay the investment company?

Accepted Answer

A)   $3
B)   $30
C)   $300
D)   $225
E)   $250F) B) and E)
G) B) and D)

Question 12

A mutual fund in which new shares are issued and existing shares redeemed by the investment company at the request of investors is called a(n)  ____________ fund.

Accepted Answer

A)   closed-end
B)   open-end
C)   load
D)   no-load
E)   convertibleF) A) and D)
G) A) and C)

Question 13

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)   convertibleF) A) and B)
G) A) and C)

Question 14

There are more exchange-traded funds than there are open-end mutual funds.

Accepted Answer

A) True 
 B)False

Question 15

Investors in closed-end, exchange-traded funds, 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 16

If you are seeking federally tax-exempt income, which type of mutual fund should you purchase?

Accepted Answer

A)   Junk bond fund
B)   Intermediate corporate bond fund
C)   Municipal bond fund
D)   Short-term government bond
E)   World bond fundF) A) and E)
G) C) and D)

Question 17

A fee that some investment companies charge for advertising and marketing a mutual fund is called a:

Accepted Answer

A)   14A-1 fee.
B)   12b-1 fee.
C)   18-2 fee.
D)   403(b)  fee.
E)   401(k)  fee.F) C) and D)
G) A) and B)

Question 18

Noelle Simon is buying shares in a mutual fund that only invests in companies located in Latin America. What type of mutual fund is this?

Accepted Answer

A)   Aggressive growth fund
B)   Equity income fund
C)   Global fund
D)   International fund
E)   Regional fundF) D) and E)
G) C) and D)

Question 19

Another name for a mutual fund that charges a contingent deferred sales load is a class ____________ fund.

Accepted Answer

A)   A
B)   B
C)   C
D)   D
E)   EF) All of the above
G) B) and D)

Question 20

Which of the following is a disadvantage associated with purchasing a mutual fund?

Accepted Answer

A)   Difficulty of buying and selling shares
B)   Aggressive or unethical sales personnel
C)   Only one withdrawal option
D)   No distribution of income and capital gains
E)   All of these are disadvantages associated with purchasing shares in a mutual fund.F) B) and D)
G) B) and C)

Exam 16: Investing in Mutual Funds

A mutual fund in which new shares are issued and existing shares redeemed by the investment company at the request of investors is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage associated with purchasing a mutual fund?

Correct AnswerverifiedShow Answer

A mutual fund that invests in common stocks of rapidly growing corporations with higher-than-average revenue and earnings growth is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

High-yield bond funds are sometimes referred to as junk bond funds.

Correct AnswerverifiedShow Answer

Noelle Simon is buying shares in a mutual fund that only invests in companies located in Latin America. What type of mutual fund is this?

Correct AnswerverifiedShow Answer

A fee that some investment companies charge for advertising and marketing a mutual fund is called a:

Correct AnswerverifiedShow Answer

For a load fund, the average commission usually ranges between 3 and 5 percent of the purchase price.

Correct AnswerverifiedShow Answer

Bob Newsome purchased 250 shares of the Northern Lights Growth Fund. The purchase cost was $30 per share. If this fund charges a 3 percent load, what is the commission amount he will pay the investment company?

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

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

Correct AnswerverifiedShow Answer

Which one of the following statements is false?

Correct AnswerverifiedShow Answer

Investors in closed-end, exchange-traded funds, 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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Capitalist Mutual Fund's portfolio is valued at $45 million. The fund has liabilities of $3 million, and the investment company sponsoring the fund has issued 1,600,000 shares. What is the fund's net asset value?

Correct AnswerverifiedShow Answer

Another name for a mutual fund that charges a contingent deferred sales load is a class ____________ fund.

Correct AnswerverifiedShow Answer

There are more exchange-traded funds than there are open-end mutual funds.

Correct AnswerverifiedShow Answer

Income dividends are the earnings a fund pays to shareholders from its dividend and interest income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If you are seeking federally tax-exempt income, which type of mutual fund should you purchase?

Correct AnswerverifiedShow Answer

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