Question 1

Typically,you must invest at least $1,000 to open a mutual fund account.

Accepted Answer

A) True 
 B)False

Question 2

The management fee for most mutual funds ranges between ____________ percent.

Accepted Answer

A)   0.5 to 4
B)   1 to 2
C)   2 to 4
D)   5 to 6½
E)   7 to 8½F) A) and C)
G) C) and D)

Question 3

Which of the following statements is false?

Accepted Answer

A)   Market timers charge 1½ percent to 3 percent of the dollar value of the funds they manage.
B)   Early research indicates that market timers must be evaluated as a group.
C)   Since market timers offer a relatively new service,it is hard to evaluate long-term performance.
D)   The true test of market timers is the ability to increase the investor's return during good times and keep that return during bad times.
E)   A market timer helps investors decide when to switch from one fund to another.F) B) and C)
G) C) and D)

Question 4

The diversification of mutual funds spells safety,because an occasional loss incurred with one investment is usually offset by gains from other investments.

Accepted Answer

A) True 
 B)False

Question 5

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a

Accepted Answer

A)   regular account.
B)   voluntary savings plan.
C)   contractual savings plan.
D)   minimum withdrawal plan.
E)   free contract plan.F) All of the above
G) C) and D)

Question 6

A mutual fund that invests in investment grade corporate and government debt is called a(n) ____________ fund.

Accepted Answer

A)   balanced
B)   equity
C)   segregated
D)   income
E)   bondF) C) and D)
G) A) and D)

Question 7

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

Accepted Answer

A)   bare bones
B)   end state
C)   bare back
D)   back-end
E)   pay laterF) B) and C)
G) A) and B)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The Jeremiah Wazan Enterprise Mutual Fund's portfolio is valued at $125,000,000.The fund has liabilities of $5,000,000,and the investment company sponsoring the fund has issued 2,000,000 shares.What is the fund's net asset value?

Accepted Answer

A)   $125
B)   $58
C)   $50
D)   $25
E)   $60F) B) and C)
G) C) and D)

Question 10

Which of the following publications does not provide readers with an annual survey of mutual funds?

Accepted Answer

A)   Canadian Business
B)   Report on Business
C)   Canada's Guide to Quality Mutual Funds
D)   IE: Money
E)   The EconomistF) B) and E)
G) C) and E)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Last month Nissa 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?

Accepted Answer

A)   growth fund
B)   dividend fund
C)   money market fund
D)   international fund
E)   bond fundF) C) and E)
G) B) and C)

Question 13

With a mutual fund you can diversify your holdings by buying a mutual fund that owns stock in hundreds of different companies.

Accepted Answer

A) True 
 B)False

Question 14

A mutual fund is:

Accepted Answer

A)   recommended for expert investors only.
B)   used exclusively for retirement accounts.
C)   an investment chosen by people who pool their money to buy financial securities
D)   risk-averse investors.
E)   a risk-free investment.F) C) and D)
G) A) and E)

Question 15

A no-load fund is a mutual fund in which no sales charge is paid by the individual investor to purchase shares.

Accepted Answer

A) True 
 B)False

Question 16

In order to sell shares in a closed-end fund,an investor must wait until the investment company is ready to repurchase the investor's shares.

Accepted Answer

A) True 
 B)False

Question 17

A redemption fee is a 1 to 6 percent charge that shareholders pay when they withdraw their investment from a mutual fund.

Accepted Answer

A) True 
 B)False

Question 18

Exchange traded funds can be traded throughout the day at changing market prices.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Mutual funds that apportion their investments among common stocks and bonds are referred to as segregated funds.

Accepted Answer

A) True 
 B)False

Exam 13: Investing in Mutual Funds

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Last month Nissa 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?

Correct AnswerverifiedShow Answer

The Jeremiah Wazan Enterprise Mutual Fund's portfolio is valued at $125,000,000.The fund has liabilities of $5,000,000,and the investment company sponsoring the fund has issued 2,000,000 shares.What is the fund's net asset value?

Correct AnswerverifiedShow Answer

A mutual fund that invests in investment grade corporate and government debt is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

The diversification of mutual funds spells safety,because an occasional loss incurred with one investment is usually offset by gains from other investments.

Correct AnswerverifiedShow Answer

A no-load fund is a mutual fund in which no sales charge is paid by the individual investor to purchase shares.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A mutual fund is:

Correct AnswerverifiedShow Answer

With a mutual fund you can diversify your holdings by buying a mutual fund that owns stock in hundreds of different companies.

Correct AnswerverifiedShow Answer

A redemption fee is a 1 to 6 percent charge that shareholders pay when they withdraw their investment from a mutual fund.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

In order to sell shares in a closed-end fund,an investor must wait until the investment company is ready to repurchase the investor's shares.

Correct AnswerverifiedShow Answer

The management fee for most mutual funds ranges between ____________ percent.

Correct AnswerverifiedShow Answer

Which of the following publications does not provide readers with an annual survey of mutual funds?

Correct AnswerverifiedShow Answer

Typically,you must invest at least $1,000 to open a mutual fund account.

Correct AnswerverifiedShow Answer

Mutual funds that apportion their investments among common stocks and bonds are referred to as segregated funds.

Correct AnswerverifiedShow Answer

Exchange traded funds can be traded throughout the day at changing market prices.

Correct AnswerverifiedShow Answer

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