Question 1

Brenda wants to invest in a fund that will outperform most others over many years. On average, she would be better off to invest in an index fund instead of a managed closed-end fund.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following types of stock funds invests in stock issued by companies expecting higher-than-average revenue and earnings growth?

Accepted Answer

A)   Equity income funds
B)   Growth funds
C)   Index funds
D)   International funds
E)   Regional fundsF) B) and D)
G) C) and E)

Question 3

The expense ratio is the amount that investors pay for all of a mutual fund's management fees and operating costs.

Accepted Answer

A) True 
 B)False

Question 4

Melinda wants to withdraw some money from her mutual fund. She has a minimum asset value of $10,000. Which of the following is not an option available for her to systematically withdraw some money?

Accepted Answer

A)   Withdraw a specified, fixed dollar amount each investment period until the fund has been exhausted
B)   Sell off a certain number of shares each investment period
C)   Withdraw a fixed percentage of asset growth
D)   Withdraw all income dividends and capital gain distributions earned in an investment period
E)   Withdraw all principal and leave interest dividends and capital gain distributions in the accountF) A) and B)
G) A) and C)

Question 5

Mutual funds provide amateur management.

Accepted Answer

A) True 
 B)False

Question 6

An exchange-traded fund is actively managed by professional fund managers and shares are traded on the floors of stock exchanges.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

The only way to get reliable information about mutual funds is to pay a fee for it.

Accepted Answer

A) True 
 B)False

Question 9

An aggressive growth fund invests in companies with a long history of paying dividends.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following types of stock funds invests in stock issued by companies throughout the world outside the United States?

Accepted Answer

A)   Equity income funds
B)   Growth funds
C)   Index funds
D)   International funds
E)   Regional fundsF) B) and C)
G) A) and B)

Question 11

An "A fund" is a mutual fund in which investors may pay a commission as high as 9.5% of the purchase price for investments.

Accepted Answer

A) True 
 B)False

Question 12

Which class of shares charges a commission (sales charge)  when shares are purchased?

Accepted Answer

A)   A
B)   B
C)   C
D)   K
E)   QF) C) and D)
G) All of the above

Question 13

Time is an important factor when evaluating a managed mutual fund for which of the following?

Accepted Answer

A)   The existence of the underlying index.
B)   The life of the companies in the fund.
C)   The length of time that the present fund manager has been managing the fund.
D)   The status of the economy.
E)   None of these.F) B) and E)
G) C) and D)

Question 14

Shelby purchased 100 shares of ABCD Growth fund and had income dividends of $15, capital gain distributions of $35, and a capital gain of $120 in the year she sold her shares, which resulted in a total dollar return of $170.

Accepted Answer

A) True 
 B)False

Question 15

Francesca withdrew $7,000 from B shares that she owned in the Already Been Counted mutual fund within one year of her purchase. If she must pay a 5% contingent deferred sales fee, what will her total fee be?

Accepted Answer

A)   $0
B)   $3.50
C)   $35.00
D)   $350.00
E)   $3,500.00F) A) and D)
G) B) and E)

Question 16

Cynthia received an IRS Form 1099DIV. This form is sent at the end of each quarter to specify how much she received in income dividends and capital gain distributions.

Accepted Answer

A) True 
 B)False

Question 17

If you start a new job and are offered the opportunity to participate in the company's 401(k)  or 403(b)  retirement plan, which of the following decisions can affect your financial future?

Accepted Answer

A)   Participating in the retirement account as a way to reduce income taxes.
B)   Participating in the retirement account to take advantage of the employer's matching contributions.
C)   Choosing mutual funds from a number of different fund options for your retirement account.
D)   Basing your actual choice of investments on your age, how long before you retire, and your tolerance for risk.
E)   All of these decisions can affect your financial future.F) A) and B)
G) A) and C)

Question 18

If Ryan wants to invest in an index mutual fund, he should not expect his fund to behave differently than the underlying index.

Accepted Answer

A) True 
 B)False

Question 19

The majority of all mutual funds are closed-end funds offered by investment companies.

Accepted Answer

A) True 
 B)False

Question 20

A socially responsible fund invests in companies that produce tobacco, nuclear energy, and weapons in order to influence the boards to change the companies' mission statements.

Accepted Answer

A) True 
 B)False

Exam 13: Investing in Mutual Funds

An aggressive growth fund invests in companies with a long history of paying dividends.

Correct AnswerverifiedShow Answer

An "A fund" is a mutual fund in which investors may pay a commission as high as 9.5% of the purchase price for investments.

Correct AnswerverifiedShow Answer

Which class of shares charges a commission (sales charge) when shares are purchased?

Correct AnswerverifiedShow Answer

If you start a new job and are offered the opportunity to participate in the company's 401(k) or 403(b) retirement plan, which of the following decisions can affect your financial future?

Correct AnswerverifiedShow Answer

Shelby purchased 100 shares of ABCD Growth fund and had income dividends of $15, capital gain distributions of $35, and a capital gain of $120 in the year she sold her shares, which resulted in a total dollar return of $170.

Correct AnswerverifiedShow Answer

Melinda wants to withdraw some money from her mutual fund. She has a minimum asset value of $10,000. Which of the following is not an option available for her to systematically withdraw some money?

Correct AnswerverifiedShow Answer

Brenda wants to invest in a fund that will outperform most others over many years. On average, she would be better off to invest in an index fund instead of a managed closed-end fund.

Correct AnswerverifiedShow Answer

Which of the following types of stock funds invests in stock issued by companies expecting higher-than-average revenue and earnings growth?

Correct AnswerverifiedShow Answer

Time is an important factor when evaluating a managed mutual fund for which of the following?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The only way to get reliable information about mutual funds is to pay a fee for it.

Correct AnswerverifiedShow Answer

If Ryan wants to invest in an index mutual fund, he should not expect his fund to behave differently than the underlying index.

Correct AnswerverifiedShow Answer

The expense ratio is the amount that investors pay for all of a mutual fund's management fees and operating costs.

Correct AnswerverifiedShow Answer

Cynthia received an IRS Form 1099DIV. This form is sent at the end of each quarter to specify how much she received in income dividends and capital gain distributions.

Correct AnswerverifiedShow Answer

The majority of all mutual funds are closed-end funds offered by investment companies.

Correct AnswerverifiedShow Answer

A socially responsible fund invests in companies that produce tobacco, nuclear energy, and weapons in order to influence the boards to change the companies' mission statements.

Correct AnswerverifiedShow Answer

Which of the following types of stock funds invests in stock issued by companies throughout the world outside the United States?

Correct AnswerverifiedShow Answer

An exchange-traded fund is actively managed by professional fund managers and shares are traded on the floors of stock exchanges.

Correct AnswerverifiedShow Answer

Francesca withdrew $7,000 from B shares that she owned in the Already Been Counted mutual fund within one year of her purchase. If she must pay a 5% contingent deferred sales fee, what will her total fee be?

Correct AnswerverifiedShow Answer

Mutual funds provide amateur management.

Correct AnswerverifiedShow Answer

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