Quiz 16: Investing in Mutual Funds

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.

Asset allocation funds invest in various asset classes including stocks,bonds,fixed-income securities,and money market instruments.

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

The fund manager is ultimately responsible for a fund's success,because he/she decides when to buy or sell securities in the fund.

Because an index mutual fund is a mirror image of a specific index,the dollar value of a share in an index fund increases when the index increases.

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

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

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.

Although mutual funds are popular among individual investors,most people do not use them as part of an IRA or retirement account.

Typically,you must invest at least $15,000 to open a mutual fund account.

Income dividends are the earnings a fund pays to shareholders from its dividend and interest income.

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

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

Tax information for mutual funds is reported as part of the year-end statement and on an IRS Form 1099 DIV.

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.

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

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

Which one of the following statements is false? A)Investors purchase mutual funds for diversification. B)Investors purchase mutual funds because of their professional management. C)Investors who purchase mutual funds are guaranteed a higher rate of return than if they were to purchase comparable stocks and bonds directly. D)Professional fund managers work for an investment company. E)Even the best portfolio managers sometimes make mistakes.

Which one of the following statements is false regarding exchange-traded funds? A)An exchange-traded fund generally invests in the stocks or securities contained in a specific stock or securities index. B)With an exchange-traded fund,an investor can purchase as little as one share. C)The majority of exchange-traded funds tend to mirror the performance of the index. D)A passively managed exchange-traded fund manager needs to make more decisions than an actively-managed mutual fund manager. E)No minimum dollar investment amount is required for exchange-traded funds.

There are about ________ investment companies that offer exchange-traded funds. A)25 B)50 C)150 D)1,900 E)10,000

Over ________ investment companies offer open-end funds. A)100 B)1,000 C)3,000 D)6,000 E)9,000

A mutual fund in which shares are issued only when the fund is organized is called a ________ fund. A)closed-end B)open-end C)load D)no-load E)convertible

A mutual fund whose shares are issued and redeemed by the investment company at the request of investors is called a ________ fund. A)closed-end B)open-end C)load D)no-load E)convertible

The current market value of a mutual fund's portfolio minus the mutual fund's liabilities equals a figure,that when divided by the number of shares outstanding,results in the: A)book value. B)outstanding balance. C)LIBOR rate. D)net asset value. E)accounting value.

The Capitalist Mutual Fund's portfolio is valued at $40 million.The fund has liabilities of $2 million,and the investment company sponsoring the fund has issued 1,250,000 shares.What is the fund's net asset value? A)$200.00 B)$30.40 C)$20.00 D)$12.50 E)$1.00

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

For most mutual funds,the net asset value is calculated at the close of trading each: A)year. B)quarter. C)week. D)day. E)hour.

The New American Enterprise Mutual Fund's portfolio is valued at $60 million.The fund has liabilities of $2 million,and the investment company sponsoring the fund has issued 2,900,000 shares.What is the fund's net asset value? A)$60 B)$58 C)$40 D)$29 E)$20

A mutual fund in which investors pay a commission every time they purchase shares is called a ________ fund. A)closed-end B)open-end C)load D)no-load E)convertible

The sales charge for purchasing shares in a load fund is ________ percent of the purchase price. 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 9 1/2 E)as high as 8 1/2

When an investor purchases shares in a load fund,the average load charge is between ________ percent. A)0)5 to 2 B)1 and 2 C)3 and 5 D)4 and 6 E)5 and 7

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? A)$30 B)$100 C)$230 D)$300 E)$500

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? A)8)5 percent B)5 percent C)4)5 percent D)3 percent E)2)5 percent

A mutual fund in which no sales charge is paid by the individual investor is called a(n)________ fund. A)closed-end B)open-end C)load D)no-load E)convertible

The average management fee for mutual funds ranges between ________ percent of the fund's assets. A)0)50 and 2 B)1)5 and 3 C)3 and 4 D)5 and 6 1/2 E)7 and 8 1/2

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

A fee that investors pay when they withdraw their investment from a mutual fund is called a: A)withdrawal fee. B)12b. C)contingent deferred sales load. D)front-end load. E)management fee.

When Pete Mills went to withdraw $3,000 from the Nationwide Fidelity Mutual fund,he was informed that the fund would charge 4 percent of the amount withdrawn.What is the dollar amount of the withdrawal charge? A)$400 B)$300 C)$120 D)$40 E)$30

A fee that some investment companies charge for distributing and marketing a mutual fund is called a: A)14A-1 fee. B)12b-1 fee. C)18-2 fee. D)403 fee. E)401 fee.

Another name for a mutual fund that charges a contingent deferred sales load is a(n)________ fund. A)A B)B C)C D)D E)E

Another name for a mutual fund that doesn't levy a sales charge,but does charge an ongoing higher 12b-1 fee is a class ________ fund. A)A B)B C)C D)D E)E

Together,all the different management fees,12b-1 fees,and additional operating costs for a specific fund are referred to as a(n): A)investment ratio. B)expense ratio. C)financial ratio. D)expense turnover. E)management ratio.

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

A mutual fund that invests in stocks and bonds with the primary objectives of conserving principal,providing income,and long-term growth is called a(n)________ fund. A)balanced B)growth C)industry D)income E)money market

A mutual fund that invests in companies expecting higher-than-average revenue and earnings growth is called a(n)________ fund. A)balanced B)growth C)industry D)income E)money market

A mutual fund that invests in stocks issued by companies with a long history of paying dividends is called a(n)________ fund. A)balanced B)equity income C)industry D)sector E)money market

A mutual fund that invests in investment-grade corporate debt with maturities between 3 and 10 years is called a(n)________ fund. A)long-term bond B)growth C)sector D)income E)intermediate corporate bond

A mutual fund that invests in companies within the same industry is called a(n)________ fund. A)growth-income B)income C)sector D)small-cap E)money market

A mutual fund that only invests in companies outside the United States is called a(n)________ fund. A)growth-income B)income C)international D)industry E)large-cap

A municipal bond fund: A)is too risky for most investors. B)invests in municipal bond mutual funds. C)invests in bonds that are backed by the federal government. D)is a risk-free investment. E)invests solely in Treasury bonds.

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

Martin Campbell wants to invest in mutual funds,but is also worried about diversification.Which fund would you recommend to him? A)Income fund B)Long-term corporate bond fund C)U)S.government bond fund D)Midcap fund E)A fund of funds

When one investment company manages a group of mutual funds,it is called a: A)family of funds. B)exchange fund. C)diversification fund. D)versatility fund. E)asset allocation fund.

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? A)Equity income fund B)Regional fund C)Sector fund D)Life-cycle fund E)Fund of funds

Which one of the following funds would be considered the safest investment? A)Growth fund B)Money market fund C)Sector fund D)Asset allocation fund E)High-yield bond fund

Which one of the following statements is false? A)The responsibility for choosing the right mutual fund rests with the individual investor. B)Professional fund managers do make mistakes. C)Investors should evaluate their investments on a regular basis. D)There is no need to evaluate mutual fund investments,because investment companies hire the best professional managers they can to manage their funds. E)Individual investors should be involved in choosing a mutual fund,because they know how the objectives of a mutual fund match their own investment objectives.

Which one of the following statements is true? A)Most mutual funds are managed funds. B)How long the present fund manager has been managing the fund is irrelevant. C)You should ignore fees when comparing mutual funds. D)Managed funds are usually index funds. E)A team of managers is always better than a single fund manager.

Which one of the following statements is false? A)As an investor,you should be concerned with how long a fund manager has been managing a mutual fund. B)The fund manager chooses when to buy and sell securities in the fund. C)If a manager has been managing a fund for 5 or 10 years,it is time to change managers and get someone with new ideas. D)The fund manager is responsible for choosing the securities that are contained in the fund. E)Managed funds have higher fees than index funds.

The typical expense ratio for an index fund is: A)0)50 percent or less. B)between 0.50 and 1 percent. C)between 1 and 2 percent. D)between 2 and 3 percent. E)over 5 percent.

Which one of the following statements is false regarding mutual funds and the internet? A)Many investors have found a wealth of information about mutual fund investments on the internet. B)It is possible to obtain current market values for a mutual fund by using the internet. C)Most investment companies that sponsor mutual funds have a websites. D)Professional advisory services are prohibited from discussing mutual funds on their websites. E)The investment companies' website will provide procedures for opening an account,how much money is required to open an account,and statistical information about individual funds.

An investment company sponsoring a mutual fund must give potential investors a(n): A)12b B)prospectus. C)disclosure/evaluation form. D)redemption fee sheet. E)annual report.

Many investors will access a fund's ________ by using the internet.It includes a letter from the fund's independent auditors that provides an opinion as to the accuracy of the fund's financial statements. A)annual report B)12b C)annual prospectus D)annual summary report from the president of the investment company E)copy of the annual mutual funds report containing a summary of the professional advisory services comments

Which one of the following publications does not provide readers with information about mutual funds and investing? A)Bloomberg Businessweek B)Current Business Survey C)Forbes D)Kiplinger's Personal Finance E)MONEY

Which of the following statements is false? A)The purpose of investing in a closed-end fund,exchange-traded fund or open-end mutual fund is to earn a financial return. B)Income dividends are the earnings that a fund pays to shareholders 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)The only way to make money on a mutual fund is by selling shares at a higher price than was initially paid for them. E)Income dividends are taxable.

During 2017,Lincoln Masters received income dividends of $850 and capital gain distributions of $540.Based on this information: A)both amounts must be included as taxable income. B)only the dividends are taxable. C)only the capital gains are taxable. D)both amounts are tax-exempt. E)both amounts are taxed at a rate of 5 percent.

Income dividends and capital gain distributions are: 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 $5,000. E)subject to federal taxation after the first $10,000.

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a: A)regular account transaction. B)voluntary savings plan. C)contractual savings plan. D)minimum withdrawal plan. E)free contract plan.

A mutual fund that requires investors to make regular purchases over a specified period of time is called a: A)regular account. B)voluntary savings plan. C)contractual savings plan. D)minimum withdrawal plan. E)free contract plan.

Because of front-end commission charges,many financial experts and government regulatory agencies are critical of: A)regular accounts. B)voluntary savings plans. C)contractual savings plans. D)minimum withdrawal plans. E)free contract plans.

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

Which one of the following is not a withdrawal option for a mutual fund owner,who has a minimum NAV of $5,000? 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 loan

Which of the following is an advantage of an exchange-traded fund? A)No minimum investment amount B)Buy and sell shares through a securities exchange at any time during the business day C)Lower management fees than closed-end or open-end funds D)Using limit orders to both buy and sell E)All of these are advantages of ETFs.

Tiffany Scott puts $8,000 into a load mutual fund.She knows that her up-front sales charge is 5%.How much of her money actually goes to buy shares in the mutual fund? A)$8,000 B)$7,600 C)$500 D)$400 E)$5

Joseph Carter is buying shares in a mutual fund that is investing in stocks throughout the world,including the United States.What type of mutual fund is this? A)Aggressive-growth fund B)Equity income fund C)Global stock fund D)International fund E)Regional fund

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? A)Aggressive growth fund B)Equity income fund C)Global stock fund D)International fund E)Regional fund

Phyllis Payne is buying shares in a mutual fund that invests in companies with a long history of paying a dividend whose objective is to provide income to shareholders.What type of mutual fund is she buying? A)Aggressive growth fund B)Equity income fund C)Global stock fund D)International fund E)Regional fund

Norma Rose is buying shares in a mutual fund that invests in foreign stocks sold in securities markets throughout the world,excluding the United States.What type of mutual fund is she buying? A)Aggressive growth fund B)Equity income fund C)Global stock fund D)International fund E)Regional fund

Noelle Simon is buying shares in a mutual fund that only invests in companies located in the Latin America area.What type of mutual fund is this? A)Aggressive growth fund B)Equity income fund C)Global stock fund D)International fund E)Regional fund

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? A)Socially responsible fund B)Sector fund C)Small cap fund D)Index fund E)Growth fund

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? A)Socially responsible fund B)Sector fund C)Small cap fund D)Index fund E)Growth fund

Sloan Richards is buying shares in a mutual fund that invests in companies with a total capitalization of less than $2 billion.What type of mutual fund is this? A)Socially responsible fund B)Sector fund C)Small cap fund D)Index fund E)Growth fund

Nathan Fuller is buying shares in a mutual fund that invests in the same companies as those found in the Standard & Poor's 500.What type of mutual fund is he buying? A)Socially responsible fund B)Sector fund C)Small cap fund D)Index fund E)Growth fund

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? A)Socially responsible fund B)Sector fund C)Small cap fund D)Index fund E)Growth fund

Which type of mutual fund invests in high-yield,high-risk corporate bonds? A)Junk bond fund B)Intermediate corporate bond fund C)Municipal bond fund D)Short-term government bond fund E)World bond fund

Which type of mutual fund invests in corporate bonds with maturities in excess of 10 years? A)Junk bond fund B)Long-term corporate bond fund C)Municipal bond fund D)Short-term government bond fund E)World bond fund

Which of the following invests in U.S.Treasury securities? A)Junk bond fund B)Intermediate U.S.bond fund C)Municipal bond fund D)Short-term corporate bond fund E)World bond fund

Marcie is seeking interest income for two years but wants to ensure that her investment is as safe as possible.Which type of mutual fund best fits her requirements? A)Junk bond fund B)Intermediate corporate bond fund C)Growth fund D)Short-term government bond fund E)World bond fund

Caroline Campbell is buying shares in a mutual fund that invests in bonds offered by foreign companies and governments.What type of mutual fund is she buying? A)Junk bond fund B)Intermediate corporate bond fund C)Municipal bond fund D)Short-term government bond fund E)World bond fund

Which of the following would be found in a mutual fund's prospectus? A)Statement describing the risk factors associated with the fund B)Description of the fund's past performance C)Information about the fund's management D)The process for buying and selling shares in the fund E)All of these would be found in a prospectus.

Which of the following is a disadvantage associated with purchasing a mutual fund? A)Difficulty of buying and selling shares B)Aggressive or unethical sales personnel C)Only one withdrawal option D)No distribution of income and capital gains E)Professional management

Which of the following is an advantage associated with purchasing a mutual fund? A)No fund management fees B)Ability to control the timing of the capital gains distributions C)Total elimination of market risk D)Switching privileges within the same fund family E)Purchase/withdrawal costs

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? A)Regular account transaction B)Voluntary savings plan C)Contractual savings plan D)Reinvestment plan E)Professional management

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? A)Class A B)Class B C)Class C D)Either class A or B E)Either class B or C

Melanie Davis is getting ready to purchase shares in a mutual fund.The fund will charge her a one-time back-end load fee only if she redeems her shares within a stated period of time (usually 5 years).What type of shares is she buying? A)Class A B)Class B C)Class C D)Either class A or B E)Either class B or C

Which one of the following is true with respect to closed-end funds? A)An unlimited number of shares are available to investors. B)Most of the investment companies today offer closed-end funds. C)Shares are traded on security exchanges similar to stocks. D)The share prices are determined by their NAV. E)Investors can never sell shares to another investor.

Which of the following is true? A)Over 100 million individual Americans own mutual funds. B)Nearly forty-five percent of all U.S.households own mutual funds. C)There were almost 12,000 mutual funds available at the beginning of 2018. D)By the end of 2017,the combined value of assets held by mutual funds totaled over 22 trillion dollars. E)All of these statements are true.

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

The Capitalist Mutual Fund's net asset value is $25.The fund has liabilities of $2.5 million and 1,500,000 shares have been issued.What is the value of the fund's portfolio? A)$25 million B)$40 million C)$50 million D)$37 million E)$15 million

The turnover ratio of a mutual fund measures the: A)length of time a manager has been in charge of the fund. B)amount of profit the fund earns from one investment period to the next. C)number of months the average investor holds the fund before selling. D)percentage of a fund's holdings that have changed or "been replaced" during a 12-month period. E)percentage of institutional investors who own the fund.

A mutual fund: A)is a way of investing in a single stock. B)offers safety through diversification because a loss in one investment is usually offset by gains in other investments within the fund. C)is insured by the FDIC. D)is not an investment that is increasing in popularity. E)is professionally managed so investors need not monitor fund results.

A closed-end fund is: A)a fund that generally invests only in the stocks or other securities contained in a specific stock or securities index. B)has only a certain number of shares available to investors when the fund is organized. C)professionally managed so investors need not monitor the performance of the fund. D)a fund whose shares are issued and redeemed by the investment company at the request of investors. E)one whose shares trade only at end-of-the-day prices.

Contingent deferred sales loads may also be referred to as ________ loads. A)front-end B)back-end C)level D)purchase E)investiture

Contingent deferred sales loads generally: A)apply until the shares you own are in the fund for 10 years or more. B)apply regardless of how long your shares have been invested. C)increase as the length of time you have been in the fund increases. D)decline gradually until there is no withdrawal fee if you own the shares for more than five years. E)apply only for the first year funds are invested.

Exchange-traded funds are offered by about ________ investment companies. A)10 B)1,900 C)10,000 D)18,000 E)25

What is the most common reason given by American mutual fund owners for investing in funds? A)To reduce taxable income B)Saving for someone's education C)Saving for emergencies D)Saving for retirement E)Saving for a new car

Another name for lifecycle funds is: A)balanced funds. B)funds of funds. C)target-date funds. D)asset allocation funds. E)money market funds.

What percent of mutual funds receive a 5-star rating from Morningstar? A)5 B)10 C)15 D)20 E)25

Which of the following is an example of an exchange-traded fund (commonly referred to as ETF)that is available to track an index? A)Midcap stocks B)Small cap stocks C)Fixed-income securities D)Commodities E)All of these are correct

Most open-end funds provide their investors with which service? A)Opportunity to buy and sell shares on request B)Payroll deduction program C)Automatic reinvestment program D)Automatic withdrawal program E)All of these

A contingent deferred sales load,which is a charge that shareholders pay when they withdraw their investment from a mutual fund,can be as low as 1 percent or as high as ________ depending on how long you own the mutual fund before making a withdrawal. A)3 percent B)5 percent C)7 percent D)10 percent E)15 percent

All of the following information is contained in a mutual fund's fee table,except: A)expected return on investment. B)management fees. C)sales charge fees. D)12b-1 fees. E)redemption fees.

Which of the following seeks high total return by maintaining precise amounts within each of the various types of asset that the fund invests in? A)Funds of fund B)Family of funds C)Fixed-income securities D)Money market instruments E)Asset allocation fund

A(n)________ fund is a fund that generally invests in the stocks or other securities contained in a specific stock or securities index. A)closed-end B)exchange-traded C)open-end D)load E)no-load

Who owns the most mutual funds? A)Investors less than 20 years old B)Investors between 18 and 36 years old C)Investors between 37 to 52 years old D)Investors between 53 to 71 years old E)Investors over 72 years old

Today many investors use firms like ________ to create a financial plan to generate the income needed to satisfy their long-term goals? A)New American Frontiers B)NASDAQ C)Dow Jones Industrial Average D)Morgan Stanley E)Standard & Poor's index

Why do Americans invest in mutual funds? A)Saving for someone's education B)Saving for emergencies C)Using funds to reduce taxable income D)Saving for retirement E)All of these

Within a family of funds,charges for exchanges generally are small for each transaction,and the fee may be as low as ________ per transaction. A)$1 B)$5 C)$10 D)$15 E)$20

Which of the following states that it is impossible to consistently beat the market without raising your risk level? A)Professional advisory services B)Professional fund manager C)Efficient market hypothesis D)Investment company E)Mutual fund broker

Morningstar rates mutual funds from the lowest to the highest using ________ stars. A)2 B)3 C)4 D)5 E)6

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? A)The Vanguard Group B)Fidelity Investments C)American Funds D)Foreign Funds E)Standard & Poor's

If the dollar amount of total return on your mutual fund is $165 and the original cost of your investment is $1,200,then what is your percentage of total return? A)6)88 percent B)7)25 percent C)12.00 percent D)13.75 percent E)16.50 percent

Which of the following is not an advantage of investing in mutual funds? A)Ease of buying and selling shares B)Ongoing management fees and 12b-1 fees C)Professional management D)Diversification E)Multiple withdrawal options

An investor is planning to systematically withdraw money from his open-end fund.He arranges to receive 40 percent of the $700 asset growth from this particular investment period.The amount he will receive is: A)$40 B)$140 C)$280 D)$470 E)$700

Which of the following is not true of index funds? A)Sometimes they are called "passive" funds. B)They do have managers that simply buy the securities in the index. C)They are a low-cost alternative to managed mutual funds. D)The S&P 500 index outperforms the majority of funds over many years. E)The typical expense ratio for index funds is 0.50 percent or more.

Which of the following is a source of detailed information for fund investments? A)Internet B)Professional advisory services C)The fund's annual report and prospectus D)Financial publications E)All of these

Which of the following rates mutual funds from 1 to 5 stars on how well they have performed in comparison with similar funds? A)Money B)Bloomberg's Businessweek C)Morningstar D)Lipper E)Value Line

What are seven steps you can take to open an investment account and begin investing in mutual funds?

Why do investors purchase mutual funds instead of purchasing stocks,bonds,or other investments on their own?

Explain the difference between a load fund and a no-load fund.From a performance standpoint,is there a significant difference between mutual funds that charge commissions and those that do not?

Cindy and John Appleby just inherited $30,000 and would like to invest the money in a conservative mutual fund.Since they have never invested in mutual funds,they ask for your help.Describe the sources of information available for evaluating a mutual fund investment.

Describe either the purchase options or withdrawal options that can be used to invest in or withdraw money from the investment company that sponsors an open-end mutual fund.

You are considering the purchase of shares in a mutual fund.Discuss three advantages and three disadvantages of mutual fund investing that you believe are important for potential investors to consider.