Question 1

Because of professional management,there is no need for the individual investor to evaluate a mutual fund investment.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)   annual report.
B)   quarterly report.
C)   redemption fee sheet.
D)   letter from the president of the investment company that details what the fund's objectives are.
E)   copy of the annual mutual funds evaluation provided by Changing Times magazine.F) D) and E)
G) B) and C)

Question 3

In a newspaper quotation,the letter "N" means no load.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is false?

Accepted Answer

A)   The purpose of investing in a closed-end or open-end mutual fund is to earn a financial return.
B)   Income dividends are the earnings that a fund pays to shareholders after it has deducted expenses 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)   It is possible to make money on a mutual fund by purchasing shares at a high price and then selling them at a low price at a later date.
E)   Real estate funds aim for long term growthF) A) and B)
G) B) and D)

Question 5

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

Question 6

Income dividends and capital gain distributions are

Accepted Answer

A)   exempt from taxation.
B)   subject to federal taxation.
C)   subject to federal taxation after the first $1,000.
D)   subject to federal taxation after the first $2,000.
E)   subject to federal taxation after the first $8,000.F) A) and E)
G) A) and D)

Question 7

Which of the following statements is true?

Accepted Answer

A)   Real estate funds offered by insurance companies as an alternative to conventional mutual funds.
B)   Bond funds seek to achieve a high level of income and liquidity.
C)   Mortgage funds have a higher risk then bond funds.
D)   Ethical funds are typically guided by moral criteria.
E)   Segregated funds are often considered a subset of specialty funds.F) A) and E)
G) A) and B)

Question 8

A mutual fund that invests almost entirely in common stocks and aims for capital gains is called a(n) ____________ fund.

Accepted Answer

A)   balanced
B)   growth
C)   income
D)   equity
E)   money marketF) A) and C)
G) None of the above

Question 9

Marisa Callaghan just purchased 100 shares in the All-Inclusive Fidelity Fund.The purchase cost for each share was $30.If this fund charges a 6 percent load,what is the total amount of commission she will pay the investment company?

Accepted Answer

A)   $3,000
B)   $1800
C)   $180
D)   $2,000
E)   It is impossible to calculate Ms.Callaghan's total investment with this informationF) B) and D)
G) A) and E)

Question 10

Mutual funds that invest in smaller,lesser known companies that offer higher growth potential are referred to as dividend funds.

Accepted Answer

A) True 
 B)False

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) C) and D)
G) C) and E)

Question 12

Tax information for mutual funds is reported as part of the year-end statement sent out by investment companies.

Accepted Answer

A) True 
 B)False

Question 13

Because of up front 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) A) and D)
G) A) and E)

Question 14

For most mutual funds,the net asset value is calculated:

Accepted Answer

A)   daily.
B)   quarterly.
C)   weekly.
D)   yearly.
E)   whenever an investor calls and requests a price quote.F) B) and C)
G) A) and E)

Question 15

Which of the following factors would not affect the relationship between an individual's investment goals and the goals of a mutual fund?

Accepted Answer

A)   the investor's age
B)   the investor's family situation
C)   the investor's income
D)   the investor's future earning power
E)   the investor's age,the investor's family situation,the investor's income,and the investor's future earning power would affect the relationship between an investor's investment goals and the goals of a mutual fund.F) A) and B)
G) A) and C)

Question 16

In an open-end fund,investors pay a commission (as high as 8.5 percent)every time they purchase or sell shares.

Accepted Answer

A) True 
 B)False

Question 17

A mutual fund that aims for capital gains is:

Accepted Answer

A)   a balanced asset allocation fund
B)   a bond fund
C)   an equity or common stock fund
D)   a specialty fund
E)   an ethical fundF) A) and D)
G) B) and C)

Question 18

Capital gain distributions result when you decide to sell shares in a mutual fund at a price higher than you paid.

Accepted Answer

A) True 
 B)False

Question 19

To purchase shares in an open-end fund,you may use four options: regular accounts,voluntary savings plans,contractual savings plans and reinvestment plans.

Accepted Answer

A) True 
 B)False

Question 20

If a mutual fund charges a front-end load of 3%,how much must the investor pay per unit if the NAVPS is $10.00?

Accepted Answer

A)   $9.70
B)   $10.00
C)   $10.16
D)   $10.31
E)   $13.00F) A) and D)
G) B) and C)

Exam 13: Investing in Mutual Funds

A mutual fund that aims for capital gains is:

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

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

Correct AnswerverifiedShow Answer

Marisa Callaghan just purchased 100 shares in the All-Inclusive Fidelity Fund.The purchase cost for each share was $30.If this fund charges a 6 percent load,what is the total amount of commission she will pay the investment company?

Correct AnswerverifiedShow Answer

Which of the following factors would not affect the relationship between an individual's investment goals and the goals of a mutual fund?

Correct AnswerverifiedShow Answer

In a newspaper quotation,the letter "N" means no load.

Correct AnswerverifiedShow Answer

Mutual funds that invest in smaller,lesser known companies that offer higher growth potential are referred to as dividend funds.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

To purchase shares in an open-end fund,you may use four options: regular accounts,voluntary savings plans,contractual savings plans and reinvestment plans.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For most mutual funds,the net asset value is calculated:

Correct AnswerverifiedShow Answer

Because of professional management,there is no need for the individual investor to evaluate a mutual fund investment.

Correct AnswerverifiedShow Answer

In an open-end fund,investors pay a commission (as high as 8.5 percent)every time they purchase or sell shares.

Correct AnswerverifiedShow Answer

Income dividends and capital gain distributions are

Correct AnswerverifiedShow Answer

Tax information for mutual funds is reported as part of the year-end statement sent out by investment companies.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

If a mutual fund charges a front-end load of 3%,how much must the investor pay per unit if the NAVPS is $10.00?

Correct AnswerverifiedShow Answer

Capital gain distributions result when you decide to sell shares in a mutual fund at a price higher than you paid.

Correct AnswerverifiedShow Answer

A mutual fund that invests almost entirely in common stocks and aims for capital gains is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

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