Question 1

Which of the following options can a mutual fund investor use to purchase shares in an open-end fund?

Accepted Answer

A)  Regular account transaction
B)  Voluntary savings plan
C)  Contractual savings plan
D)  Reinvestment plan
E)  All of these are ways to purchase shares in an open-end fund.F) B) and E)
G) A) and D)

Question 2

Exchange-traded funds make-up about what percent of all mutual funds?

Accepted Answer

A)  10
B)  13
C)  15
D)  18
E)  25F) A) and E)
G) A) and D)

Question 3

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

Accepted Answer

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

Question 4

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

Question 5

When an investor purchases shares in a load fund,the average charge is usually between ____________ percent.

Accepted Answer

A)  0.5 to 2
B)  1 and 3
C)  2 and 5
D)  5 and 7
E)  4 and 6F) B) and E)
G) C) and D)

Question 6

A mutual fund that invests in corporations expecting higher-than-average revenue and earnings growth is called a ____________ fund.

Accepted Answer

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

Question 7

The major reasons why investors purchase mutual funds are professional management and diversification.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

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

Question 9

Investors in closed-end funds,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 10

The family of funds concept makes it convenient for shareholders to switch their investments among funds as different funds offer more potential.

Accepted Answer

A) True 
 B)False

Question 11

When one investment company manages a group of mutual funds,it is called a:

Accepted Answer

A)  family of funds.
B)  exchange fund.
C)  diversification fund.
D)  versatility fund.
E)  asset allocation fund.F) A) and B)
G) C) and E)

Question 12

Most open-end funds provide their investors with which service?

Accepted Answer

A)  Opportunity to buy and sell shares on request
B)  Payroll deduction program
C)  Automatic reinvestment program
D)  Automatic withdrawal program
E)  All of theseF) A) and E)
G) A) and D)

Question 13

Many financial planners recommend that investors choose a mutual fund with an expense ratio that is:

Accepted Answer

A)  1 percent or less.
B)  between 1 and 2 percent.
C)  between 2 and 3 percent.
D)  between 3 and 4 percent.
E)  over 4 percent.F) A) and B)
G) C) and E)

Question 14

Which of the following states that it is impossible to consistently beat the market without raising your risk level?

Accepted Answer

A)  Professional advisory services
B)  Professional fund manager
C)  Efficient market hypothesis
D)  Investment company
E)  Mutual fund brokerF) A) and E)
G) A) and D)

Question 15

Conrad Maestro is buying shares in a mutual fund that seeks rapid price appreciation by purchasing stocks whose prices are expected to increase dramatically in a short period of time.What type of mutual fund is he purchasing?

Accepted Answer

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

Question 16

If an investor uses a reinvestment plan to invest income dividends and capital-gain distributions:

Accepted Answer

A)  then both the income dividends and capital-gain distributions are tax-exempt.
B)  only the income dividends are tax-exempt.
C)  only the capital-gain distributions are tax-exempt.
D)  both the income dividends and capital-gain distributions are currently taxable.
E)  then both the income dividends and capital-gain distributions will be tax-deferred.F) A) and B)
G) A) and C)

Question 17

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 18

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a:

Accepted Answer

A)  regular account transaction.
B)  voluntary savings plan.
C)  contractual savings plan.
D)  minimum withdrawal plan.
E)  free contract plan.F) None of the above
G) C) and D)

Question 19

Which one of the following is true with respect to closed-end funds?

Accepted Answer

A)  Shares are issued whenever an investor wants to purchase them.
B)  Most of the funds today are closed-end.
C)  Shares are traded on security exchanges similar to stocks.
D)  The share prices are determined by their NAV.
E)  Investors redeem their shares by selling them directly to the fund.F) A) and E)
G) A) and D)

Question 20

The sales charge for purchasing fund shares that impose an up-front commission is____________ percent of the purchase price.

Accepted Answer

A)  an average of 0.50 to 1
B)  an average of 1 to 2
C)  an average of 2 to 4
D)  an average of 5 to 6 1/2
E)  as high as 8 1/2F) B) and D)
G) A) and B)

Exam 16: Investing in Mutual Funds

If an investor uses a reinvestment plan to invest income dividends and capital-gain distributions:

Correct AnswerverifiedShow Answer

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a:

Correct AnswerverifiedShow Answer

Which of the following options can a mutual fund investor use to purchase shares in an open-end fund?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When one investment company manages a group of mutual funds,it is called a:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Exchange-traded funds make-up about what percent of all mutual funds?

Correct AnswerverifiedShow Answer

A mutual fund that invests in corporations expecting higher-than-average revenue and earnings growth is called a ____________ fund.

Correct AnswerverifiedShow Answer

Conrad Maestro is buying shares in a mutual fund that seeks rapid price appreciation by purchasing stocks whose prices are expected to increase dramatically in a short period of time.What type of mutual fund is he purchasing?

Correct AnswerverifiedShow Answer

Which of the following states that it is impossible to consistently beat the market without raising your risk level?

Correct AnswerverifiedShow Answer

Investors in closed-end funds,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

The major reasons why investors purchase mutual funds are professional management and diversification.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The family of funds concept makes it convenient for shareholders to switch their investments among funds as different funds offer more potential.

Correct AnswerverifiedShow Answer

The sales charge for purchasing fund shares that impose an up-front commission is____________ percent of the purchase price.

Correct AnswerverifiedShow Answer

Many financial planners recommend that investors choose a mutual fund with an expense ratio that is:

Correct AnswerverifiedShow Answer

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

Which one of the following is true with respect to closed-end funds?

Correct AnswerverifiedShow Answer

Most open-end funds provide their investors with which service?

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When an investor purchases shares in a load fund,the average charge is usually between ____________ percent.

Correct AnswerverifiedShow Answer

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The major reasons why investors purchase...
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