Question 1

A mutual fund that invests in companies within the same industry is called a(n) ________ fund.

Accepted Answer

A)  growth-income
B)  income
C)  sector
D)  small-cap
E)  money marketF) A) and C)
G) A) and B)

Question 2

Will Hopkins is getting ready to purchase shares in a mutual fund.He will have to pay a one-time sales charge to purchase these shares.What type of shares is he 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 3

A(n) ________ fund is a fund that generally invests in the stocks or other securities contained in a specific stock or securities index.

Accepted Answer

A)  closed-end
B)  exchange-traded
C)  open-end
D)  load
E)  no-loadF) C) and D)
G) B) and D)

Question 4

Mary Cooper just purchased 100 shares in the All-American Fund.The purchase cost for each share was $10.If this fund charges a 3 percent load,what is the total amount of commission she will pay the investment company?

Accepted Answer

A)  $30
B)  $100
C)  $230
D)  $300
E)  $500F) B) and E)
G) A) and C)

Question 5

The average management fee for all mutual funds is ________ of the fund's assets:

Accepted Answer

A)  less than 0.01 percent.
B)  less than 0.05 percent.
C)  0.50 to 2 percent.
D)  2 to 4 percent.
E)  4 to 5 percent.F) None of the above
G) A) and D)

Question 6

Sharon Taylor uses all of her dividend income and capital gain distributions to purchase additional shares in her mutual fund.Which one of the following plans is she using?

Accepted Answer

A)  Regular account transaction
B)  Voluntary savings plan
C)  Contractual savings plan
D)  Reinvestment plan
E)  Professional managementF) C) and E)
G) None of the above

Question 7

Another name for a mutual fund that charges a contingent deferred sales load is a(n) ________ fund.

Accepted Answer

A)  A
B)  B
C)  C
D)  D
E)  EF) B) and D)
G) A) and D)

Question 8

Bob Newsome purchased 250 shares of the Northern Lights Growth Fund.The purchase cost was $20 per share and the total commission was $250.What is the load being charged by the fund?

Accepted Answer

A)  8.5 percent
B)  5 percent
C)  4.5 percent
D)  3 percent
E)  2.5 percentF) C) and D)
G) A) and E)

Question 9

Henrietta Marston plans to retire in the year 2050.She is considering a fund that will be more risk-oriented now and become increasingly conservative as she approaches retirement.Which of the following funds would you recommend to her?

Accepted Answer

A)  Equity income fund
B)  Regional fund
C)  Sector fund
D)  Life-cycle fund
E)  Fund of fundsF) B) and D)
G) B) and E)

Question 10

A mutual fund in which shares are issued only when the fund is organized is called a ________ fund.

Accepted Answer

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

Question 11

Exchange-traded funds are offered by about ________ investment companies.

Accepted Answer

A)  10
B)  1,900
C)  10,000
D)  18,000
E)  25F) None of the above
G) B) and E)

Question 12

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 13

Last month Nellie Jacobson's divorce became final.As part of the settlement,she received $150,000.She would like to invest in mutual funds,but since she is 62 years old,she is concerned with the safety of her "nest egg." Which of the following mutual funds would you recommend?

Accepted Answer

A)  Growth fund
B)  Small cap fund
C)  High-yield bond fund
D)  International fund
E)  Short-term U.S.government bond fundF) A) and C)
G) A) and E)

Question 14

While advisory services provide detailed information on common and preferred stocks,there are no advisory services that provide information on mutual funds.

Accepted Answer

A) True 
 B)False

Question 15

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)  sales charge fees.
D)  12b-1 fees.
E)  redemption fees.F) B) and C)
G) All of the above

Question 16

The All-Star Basic Value Fund's portfolio is valued at $105 million.The fund has liabilities of $2.5 million,and the fund's net asset value is $6.25.What is the fund's number of shares outstanding?

Accepted Answer

A)  2,500,000
B)  5,500,000
C)  6,250,000
D)  16,400,000
E)  38,720,000F) B) and E)
G) B) and D)

Question 17

The average management fee for mutual funds ranges between ________ percent of the fund's assets.

Accepted Answer

A)  0.50 and 2
B)  1.5 and 3
C)  3 and 4
D)  5 and 6 1/2
E)  7 and 8 1/2F) D) and E)
G) C) and D)

Question 18

Which of the following companies manages assets of $5.1 trillion,has almost 400 different funds,and has historically been known as the leader of low-cost investing?

Accepted Answer

A)  The Vanguard Group
B)  Fidelity Investments
C)  American Funds
D)  Foreign Funds
E)  Standard & Poor'sF) A) and B)
G) B) and C)

Question 19

Today,there are more investment companies that offer closed-end funds than there are that offer open-end funds.

Accepted Answer

A) True 
 B)False

Question 20

Tisha Elmwood is buying shares in a mutual fund that avoids companies that do harm to people,animals,and the environment.What type of mutual fund is this?

Accepted Answer

A)  Socially responsible fund
B)  Sector fund
C)  Small cap fund
D)  Index fund
E)  Growth fundF) C) and D)
G) A) and D)

Exam 16: Investing in Mutual Funds

Mary Cooper just purchased 100 shares in the All-American Fund.The purchase cost for each share was $10.If this fund charges a 3 percent load,what is the total amount of commission she will pay the investment company?

Correct AnswerverifiedShow Answer

Exchange-traded funds are offered by about ________ investment companies.

Correct AnswerverifiedShow Answer

The average management fee for all mutual funds is ________ of the fund's assets:

Correct AnswerverifiedShow Answer

Today,there are more investment companies that offer closed-end funds than there are that offer open-end funds.

Correct AnswerverifiedShow Answer

Henrietta Marston plans to retire in the year 2050.She is considering a fund that will be more risk-oriented now and become increasingly conservative as she approaches retirement.Which of the following funds would you recommend to her?

Correct AnswerverifiedShow Answer

Another name for a mutual fund that charges a contingent deferred sales load is a(n) ________ fund.

Correct AnswerverifiedShow Answer

A mutual fund that invests in companies within the same industry is called a(n) ________ fund.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

While advisory services provide detailed information on common and preferred stocks,there are no advisory services that provide information on mutual funds.

Correct AnswerverifiedShow Answer

Which of the following companies manages assets of $5.1 trillion,has almost 400 different funds,and has historically been known as the leader of low-cost investing?

Correct AnswerverifiedShow Answer

The average management fee for mutual funds ranges between ________ percent of the fund's assets.

Correct AnswerverifiedShow Answer

Will Hopkins is getting ready to purchase shares in a mutual fund.He will have to pay a one-time sales charge to purchase these shares.What type of shares is he buying?

Correct AnswerverifiedShow Answer

Sharon Taylor uses all of her dividend income and capital gain distributions to purchase additional shares in her mutual fund.Which one of the following plans is she using?

Correct AnswerverifiedShow Answer

Bob Newsome purchased 250 shares of the Northern Lights Growth Fund.The purchase cost was $20 per share and the total commission was $250.What is the load being charged by the fund?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The All-Star Basic Value Fund's portfolio is valued at $105 million.The fund has liabilities of $2.5 million,and the fund's net asset value is $6.25.What is the fund's number of shares outstanding?

Correct AnswerverifiedShow Answer

A mutual fund in which shares are issued only when the fund is organized is called a ________ fund.

Correct AnswerverifiedShow Answer

Last month Nellie Jacobson's divorce became final.As part of the settlement,she received $150,000.She would like to invest in mutual funds,but since she is 62 years old,she is concerned with the safety of her "nest egg." Which of the following mutual funds would you recommend?

Correct AnswerverifiedShow Answer

Tisha Elmwood is buying shares in a mutual fund that avoids companies that do harm to people,animals,and the environment.What type of mutual fund is this?

Correct AnswerverifiedShow Answer

A(n) ________ fund is a fund that generally invests in the stocks or other securities contained in a specific stock or securities index.

Correct AnswerverifiedShow Answer

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