Personal Finance Study Set 15

At the beginning of 2018,there were almost 12,000 investment companies sponsoring mutual funds.

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

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

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

Investors in an open-end fund are free to buy and sell shares at the net asset value.

There are more investment companies that offer exchange-traded funds than there are that offer open-end mutual funds.

The potential return on any investment should be indirectly related to the risk the investor assumes.

A load fund is a mutual fund in which investors pay a commission either when they purchase shares.

If you need your money in a short period of time,you should consider conservative investments with less risk.

You should consider your tolerance for risk before investing in mutual funds.

For a mutual fund,the annual management fee is a fixed percentage of the fund's total liabilities.

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

Investors 72 years or older are less likely to invest in mutual funds than any other age group.

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

Class C shares,with their ongoing higher 12b-1 fees,may be more expensive than Class A shares over a period of years.

All details related to management fees,sales fees,12b-1 fees,and other expenses are contained in a mutual fund's prospectus.

Mutual funds that allocate their investments among common stocks and bonds are referred to as small cap funds.

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

High-yield bond funds are sometimes referred to as junk-bond funds.

A mutual fund that provides tax-free interest income is referred to as a long-term U.S.bond fund.