Question 1

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

Accepted Answer

The average management fee for mutual funds typically ranges between 0.50% and 2% of the fund's assets. This fee is charged by fund managers for selecting investments and managing the fund's portfolio.

Question 2

For most mutual funds,the net asset value is calculated at the close of trading each:

Accepted Answer

For most mutual funds, the net asset value (NAV) is calculated at the close of trading each day. This daily calculation is essential for providing current values to investors who wish to buy or sell shares.

Question 3

A mutual fund in which no sales charge is paid by the individual investor is called a(n)________ fund.

Accepted Answer

A no-load fund is a mutual fund in which shares are sold without a commission or sales charge. This means that the entirety of the invested funds goes towards purchasing shares, rather than paying for fees or commissions.

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 fund issues shares only at the time of its organization, after which shares are bought and sold on the open market and not redeemable from the fund itself.

Question 5

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

Accepted Answer

A load mutual fund charges investors a commission every time they buy shares, which is essentially a sales charge. This contrasts with a no-load fund, which does not charge any commission for buying shares.

Question 6

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.

Accepted Answer

Class C funds do not have a front-end sales charge but have higher ongoing 12b-1 fees compared to other classes.

Question 7

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:

Accepted Answer

The net asset value (NAV) is calculated by taking the total value of a mutual fund's portfolio, subtracting the fund's liabilities, and then dividing this figure by the number of shares outstanding. This gives the value per share of the mutual fund.

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

The answer of Bob Newsome purchased 250 shares of the...

Question 9

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

Accepted Answer

A contingent deferred sales load is a fee charged to investors when they withdraw their investment from a mutual fund, typically decreasing over time the longer the investment is held.

Question 10

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

Accepted Answer

A mutual fund that charges a contingent deferred sales load is commonly referred to as a Class B fund.

Question 11

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?

Accepted Answer

The withdrawal charge is 4% of $3,000, which is calculated as $3,000 * 0.04 = $120.

Question 12

The sales charge for purchasing shares in a load fund is ________ percent of the purchase price.

Accepted Answer

The sales charge for purchasing shares in a load fund can be as high as 8 1/2 percent of the purchase price, which is the maximum allowed by the Financial Industry Regulatory Authority (FINRA).

Question 13

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?

Accepted Answer

Net asset value = (Portfolio value - Liabilities) / Number of shares= ($40 million - $2 million) / 1,250,000= $38 million / 1,250,000= $30.40

Question 14

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

Accepted Answer

The average management fee for all mutual funds typically ranges from 0.50 to 2 percent of the fund's assets. This fee compensates the fund managers for their investment management and operational services.

Question 15

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

The answer of The All-Star Basic Value Fund's portfolio is...

Question 16

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?

Accepted Answer

The answer of The New American Enterprise Mutual Fund's portfolio...

Question 17

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

Accepted Answer

The correct answer is B) 12b-1 fee. This fee is charged by some mutual funds to cover the costs associated with marketing and distributing the fund. It is named after the SEC rule that permits it.

Question 18

A mutual fund whose shares are issued and redeemed by the investment company at the request of investors is called a ________ fund.

Accepted Answer

An open-end fund is a type of mutual fund that does not have a fixed number of shares. It issues new shares to investors when they buy and redeems them when investors sell, directly through the fund itself.

Question 19

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

The load is a fee charged when purchasing the shares, calculated as a percentage of the purchase amount. Here, a 3 percent load on the purchase of 100 shares at $10 each equals $300 total purchase amount * 0.03 = $9. However, the correct calculation for a 3 percent load on $300 is actually $9, not $30. This appears to be a mistake in the interpretation of the options provided. The correct commission should indeed be $300 * 0.03 = $9, but this option is not listed. Given the options, none directly reflect the correct calculation, suggesting a misunderstanding in the explanation provided.

Question 20

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

Accepted Answer

Load charges for mutual funds typically range between 3 and 5 percent. These fees are sales charges paid by the investor when purchasing shares in a load fund.

Quiz 16: Investing in Mutual Funds