Exam 13: Investing in Mutual Funds

A fund's objective must be stated in its prospectus.

Mutual funds may be bought and sold through

Loads are transaction charges for mutual funds.

Conversion privileges allow investors to exchange one fund's shares for that of another,as long as the funds are in the same fund family.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The cost of buying shares in a load fund is [high | low] compared to the commissions charged for buying stock.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -You [could | could not] switch your investments from your Fidelity income fund to another Fidelity fund by making a phone call.

The current market value of all the securities a mutual fund owns is called the

By using automatic reinvestment plans,dividend and capital gains are used to automatically buy additional shares in the fund.

Open ended mutual funds companies buy their shares back from investors at NAV.

A mutual fund's price per share will increase if its underlying holdings increase in value.

Open ended mutual funds typically offer more diversification than an individual security.

Money market funds are traded on the Money Market,just as closed-end stock funds are traded on the stock market.

Sector funds may include stocks from different indexes.

Closed-end mutual funds always charge an upfront fee to make a purchase.

Value funds typically invest in stocks that do not pay dividends and have a high price/earning ratio.

By definition,all ETF are no-load funds.

Which of the following bond mutual funds would provide tax-free income?

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The securities owned by a mutual fund are in the custody of [the management company | an independent bank].

Another name for a mutual fund is

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -There are [more | fewer] mutual funds than there are stocks listed on the New York Stock Exchange.