Question 1

The commission charge for purchasing fund shares that impose an up-front commission charge ____________ percent.

Accepted Answer

A)   averages 0.50 to 1
B)   averages 1 to 2
C)   averages 2 to 4
D)   averages 5 to 6 1/2
E)   may be as high as 8 1/2F) B) and C)
G) None of the above

Question 2

A closed end-fund is:

Accepted Answer

A)   a fund that generally invests only in the stocks or other securities contained in a specific stock or securities index.
B)   a fund whose shares are issued by an investment company only when the fund is organized.
C)   professionally managed so investors need not monitor the performance of the fund.
D)   a fund whose shares are issued and redeemed by the investment company at the request of investors.
E)   one whose shares trade only at end-of-the-day prices.F) A) and C)
G) A) and B)

Question 3

The Capitalist Mutual Fund's net asset value is $26.25. The fund has liabilities of $3 million and 1,600,000 shares have been issued. What is the value of the fund's portfolio?

Accepted Answer

A)   $42 million
B)   $45 million
C)   $50 million
D)   $39 million
E)   $36 millionF) B) and C)
G) C) and D)

Question 4

A mutual fund that invests in investment-grade corporate debt with maturities between 5 and 10 years is called a(n)  ____________ fund.

Accepted Answer

A)   long-term bond
B)   growth
C)   sector
D)   income
E)   intermediate corporate bondF) A) and B)
G) D) and E)

Question 5

The fund manager is ultimately responsible for a fund's success.

Accepted Answer

A) True 
 B)False

Question 6

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.F) C) and D)
G) A) and B)

Question 7

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

Question 8

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 9

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 10

Melanie Davis is getting ready to purchase shares in a mutual fund. The fund will charge her a sales charge only if she redeems her shares within a stated period of time. What type of shares is she buying?

Accepted Answer

A)   Class A
B)   Class B
C)   Class C
D)   Either class A or B
E)   Either class B or CF) None of the above
G) B) and D)

Question 11

A mutual fund that requires investors to make regular purchases over a specified period of time is called a:

Accepted Answer

A)   regular account.
B)   voluntary savings plan.
C)   contractual savings plan.
D)   minimum withdrawal plan.
E)   free contract plan.F) A) and E)
G) C) and E)

Question 12

All of the following information is contained in a mutual fund's fee table, except:

Accepted Answer

A)   expected return on investment.
B)   management fees.
C)   contingent deferred sales fees.
D)   12b-1 fees.
E)   redemption fees.F) C) and E)
G) A) and E)

Question 13

Your parents are considering the purchase of shares in a mutual fund. Discuss three advantages and three disadvantages of mutual fund investing that you believe are important for potential investors to consider.

Accepted Answer

Students may choose from the following a...

Question 14

Another name for lifecycle funds is:

Accepted Answer

A)   balanced funds.
B)   funds of funds.
C)   target-date funds.
D)   asset allocation funds.
E)   money market funds.F) A) and C)
G) A) and E)

Question 15

The All-Star Basic Value Fund's portfolio is valued at $210 million. The fund has liabilities of $5 million, and the investment company sponsoring the fund has issued 16,400,000 shares. What is the fund's net asset value?

Accepted Answer

A)   $25.00
B)   $21.00
C)   $16.40
D)   $12.50
E)   $5.00F) All of the above
G) B) and C)

Question 16

Because of up front commission charges, many financial experts and government agencies are critical of:

Accepted Answer

A)   regular accounts.
B)   voluntary savings plans.
C)   contractual savings plans.
D)   minimum withdrawal plans.
E)   free contract plans.F) C) and E)
G) B) and C)

Question 17

Which one of the following statements is false?

Accepted Answer

A)   As an investor, you should be concerned with how long a fund manager has been managing a mutual fund.
B)   Often, a fund's success is tied to the manager's ability to buy and sell securities in the fund.
C)   If a manager has been managing a fund for 5 or 10 years, it is time to change managers and get someone with new ideas.
D)   Ultimately, the fund manager is responsible for a fund's success.
E)   Managed funds may be open-end funds or closed-end funds.F) A) and E)
G) C) and D)

Question 18

Which of the following would be found in a mutual fund's prospectus?

Accepted Answer

A)   Statement describing the risk factors associated with the fund
B)   Description of the fund's past performance
C)   Information about the fund's management
D)   The process for buying and selling shares in the fund
E)   All of these would be found in a prospectus.F) C) and D)
G) A) and D)

Question 19

Caroline Campbell is buying shares in a mutual fund that invests in bonds offered by foreign companies and governments. What type of mutual fund is she buying?

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 B)
G) B) and E)

Question 20

In late 2011, there were almost 13,000 mutual funds, and the number continues to increase each year.

Accepted Answer

A) True 
 B)False

Exam 16: Investing in Mutual Funds

Because of up front commission charges, many financial experts and government agencies are critical of:

Correct AnswerverifiedShow Answer

The fund manager is ultimately responsible for a fund's success.

Correct AnswerverifiedShow 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

Your parents are considering the purchase of shares in a mutual fund. Discuss three advantages and three disadvantages of mutual fund investing that you believe are important for potential investors to consider.

Correct AnswerverifiedStudents may choose from the following a...View AnswerShow Answer

Caroline Campbell is buying shares in a mutual fund that invests in bonds offered by foreign companies and governments. What type of mutual fund is she buying?

Correct AnswerverifiedShow Answer

Another name for lifecycle funds is:

Correct AnswerverifiedShow Answer

The All-Star Basic Value Fund's portfolio is valued at $210 million. The fund has liabilities of $5 million, and the investment company sponsoring the fund has issued 16,400,000 shares. What is the fund's net asset value?

Correct AnswerverifiedShow Answer

All of the following information is contained in a mutual fund's fee table, except:

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Which of the following would be found in a mutual fund's prospectus?

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Melanie Davis is getting ready to purchase shares in a mutual fund. The fund will charge her a sales charge only if she redeems her shares within a stated period of time. What type of shares is she buying?

Correct AnswerverifiedShow Answer

A mutual fund that invests in investment-grade corporate debt with maturities between 5 and 10 years is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

A closed end-fund is:

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

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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

In late 2011, there were almost 13,000 mutual funds, and the number continues to increase each year.

Correct AnswerverifiedShow Answer

Which one of the following statements is false?

Correct AnswerverifiedShow Answer

Which one of the following statements is false?

Correct AnswerverifiedShow Answer

A mutual fund that requires investors to make regular purchases over a specified period of time is called a:

Correct AnswerverifiedShow Answer

The commission charge for purchasing fund shares that impose an up-front commission charge ____________ percent.

Correct AnswerverifiedShow Answer

The Capitalist Mutual Fund's net asset value is $26.25. The fund has liabilities of $3 million and 1,600,000 shares have been issued. What is the value of the fund's portfolio?

Correct AnswerverifiedShow Answer

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To purchase shares in an open-end mutual...
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Students may choose from the following a...
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The major reasons why investors purchase...
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