Question 1

To purchase shares in an open-end mutual fund from an investment company,you may use four options: regular account transactions,voluntary savings plans,contractual savings plans,and reinvestment plans.

Accepted Answer

A) True 
 B)False

Question 2

Will Hopkins is getting ready to purchase shares in a mutual fund.He will have to pay an upfront sales commission 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) D) and E)
G) A) and B)

Question 3

A mutual fund that invests in investment-grade corporate debt with maturities between 3 and 10 years is called a ____________ fund.

Accepted Answer

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

Question 4

Which one of the following is not a withdrawal option for a mutual fund?

Accepted Answer

A)  Withdrawing a specified, fixed dollar amount each investment period
B)  Liquidating, or "selling off" a certain number of shares each investment period
C)  Withdrawing a fixed percentage of asset growth
D)  Withdrawing all asset growth earned during an investment period
E)  Withdrawing a stated amount and treating it as a short-term loanF) A) and D)
G) None of the above

Question 5

Contingent deferred sales loads may also be referred to as ____ loads.

Accepted Answer

A)  front-end
B)  back-end
C)  level
D)  purchase
E)  investitureF) A) and B)
G) All of the above

Question 6

Together,all the different management fees,12b-1 fees,and additional operating costs for a specific fund are referred to as a(n) :

Accepted Answer

A)  investment ratio.
B)  expense ratio.
C)  financial ratio.
D)  expense turnover.
E)  management ratio.F) A) and C)
G) A) and B)

Question 7

The New American Enterprise Mutual Fund's portfolio is valued at $120 million.The fund has liabilities of $4 million,and the investment company sponsoring the fund has issued 5,800,000 shares.What is the fund's net asset value?

Accepted Answer

A)  $120
B)  $58
C)  $40
D)  $30
E)  $20F) C) and D)
G) B) and E)

Question 8

An investment company sponsoring a mutual fund must give existing shareholders a prospectus.

Accepted Answer

A) True 
 B)False

Question 9

Louise Prescott is buying shares in a mutual fund that invests in larger,well-established companies that are expecting higher-than-average revenues and earnings growth.What type of mutual fund is she buying?

Accepted Answer

A)  Socially responsible fund
B)  Sector fund
C)  Small-cap fund
D)  Index fund
E)  Growth fundF) None of the above
G) A) and C)

Question 10

Mutual funds have been around for a long time and became popular in the U.S.before the Great Depression in 1929.

Accepted Answer

A) True 
 B)False

Question 11

When you invest in Class A shares,you pay a sales commission when you sell your mutual fund shares.

Accepted Answer

A) True 
 B)False

Question 12

While mutual fund income dividends are subject to taxation,capital gain distributions are not subject to taxation.

Accepted Answer

A) True 
 B)False

Question 13

A fee that investors pay when they withdraw their investment from a mutual fund is called a:

Accepted Answer

A)  withdrawal fee.
B)  12b
C)  contingent deferred sales load.
D)  front-end load.
E)  management fee.F) None of the above
G) All of the above

Question 14

Marcie is seeking interest income but wants to ensure that her investment is as safe as possible.Which type of mutual fund best fits her requirements?

Accepted Answer

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

Question 15

Mary Cooper just purchased 100 shares in the All-American Fund.The purchase cost for each share was $20.If this fund charges a 5 percent load,what is the total amount of commission she will pay the investment company?

Accepted Answer

A)  $100
B)  $1,000
C)  $2,000
D)  $200
E)  $1F) A) and D)
G) A) and C)

Question 16

Over many years,the majority of managed mutual funds outperform the Standard & Poor's 500 stock index.

Accepted Answer

A) True 
 B)False

Question 17

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 18

The All-Star Basic Value Fund's portfolio is valued at $210 million.The fund has liabilities of $5 million,and the fund's net asset value is $12.50.What is the fund's number of shares outstanding?

Accepted Answer

A)  5,000,000
B)  7,500,000
C)  12,500,000
D)  16,400,000
E)  38,720,000F) B) and E)
G) A) and B)

Question 19

When you decide to redeem shares in an open-end mutual fund,the only option is to sell off a specific number of shares.

Accepted Answer

A) True 
 B)False

Question 20

Christopher Fishbone is buying shares in a mutual fund that invests in companies that are all in the natural resources industry.What type of mutual fund is he buying?

Accepted Answer

A)  Socially responsible fund
B)  Sector fund
C)  Small-cap fund
D)  Index fund
E)  Growth fundF) None of the above
G) B) and E)

Exam 16: Investing in Mutual Funds

An investment company sponsoring a mutual fund must give existing shareholders a prospectus.

Correct AnswerverifiedShow Answer

Will Hopkins is getting ready to purchase shares in a mutual fund.He will have to pay an upfront sales commission to purchase these shares.What type of shares is he buying?

Correct AnswerverifiedShow Answer

The New American Enterprise Mutual Fund's portfolio is valued at $120 million.The fund has liabilities of $4 million,and the investment company sponsoring the fund has issued 5,800,000 shares.What is the fund's net asset value?

Correct AnswerverifiedShow Answer

Over many years,the majority of managed mutual funds outperform the Standard & Poor's 500 stock index.

Correct AnswerverifiedShow Answer

Louise Prescott is buying shares in a mutual fund that invests in larger,well-established companies that are expecting higher-than-average revenues and earnings growth.What type of mutual fund is she buying?

Correct AnswerverifiedShow Answer

A mutual fund that invests in investment-grade corporate debt with maturities between 3 and 10 years is called a ____________ fund.

Correct AnswerverifiedShow Answer

Together,all the different management fees,12b-1 fees,and additional operating costs for a specific fund are referred to as a(n) :

Correct AnswerverifiedShow Answer

Contingent deferred sales loads may also be referred to as ____ loads.

Correct AnswerverifiedShow Answer

Christopher Fishbone is buying shares in a mutual fund that invests in companies that are all in the natural resources industry.What type of mutual fund is he buying?

Correct AnswerverifiedShow Answer

To purchase shares in an open-end mutual fund from an investment company,you may use four options: regular account transactions,voluntary savings plans,contractual savings plans,and reinvestment plans.

Correct AnswerverifiedShow Answer

Which one of the following is not a withdrawal option for a mutual fund?

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

When you decide to redeem shares in an open-end mutual fund,the only option is to sell off a specific number of shares.

Correct AnswerverifiedShow Answer

Mary Cooper just purchased 100 shares in the All-American Fund.The purchase cost for each share was $20.If this fund charges a 5 percent load,what is the total amount of commission she will pay the investment company?

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 fund's net asset value is $12.50.What is the fund's number of shares outstanding?

Correct AnswerverifiedShow Answer

Mutual funds have been around for a long time and became popular in the U.S.before the Great Depression in 1929.

Correct AnswerverifiedShow Answer

When you invest in Class A shares,you pay a sales commission when you sell your mutual fund shares.

Correct AnswerverifiedShow Answer

A fee that investors pay when they withdraw their investment from a mutual fund is called a:

Correct AnswerverifiedShow Answer

While mutual fund income dividends are subject to taxation,capital gain distributions are not subject to taxation.

Correct AnswerverifiedShow Answer

Marcie is seeking interest income but wants to ensure that her investment is as safe as possible.Which type of mutual fund best fits her requirements?

Correct AnswerverifiedShow Answer

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