Question 1

Mutual funds provide an inexpensive way for investors to diversify and gain access to professional management.

Accepted Answer

A) True 
 B)False

Question 2

What is the total return for a mutual fund with the following characteristics?
Beginning NAV = $55.82
Ending NAV = $70.52
Dividends distributed = $2.25
Capital gains distributed = $3.50

Accepted Answer

A)  29.71% 
B)  30.82% 
C)  32.26% 
D)  36.64% 
A)  29.71% 
B)  30.82% 
C)  32.26% 
D)  36.64%

Question 3

Which of the following are passed on to fund share holders through 12b-1 fees?

Accepted Answer

A)  commissions 
B)  advertising expenses 
C)  promotional fees 
D)  only B and C 
E)  all of the above 
A)  commissions 
B)  advertising expenses 
C)  promotional fees 
D)  only B and C 
E)  all of the above

Question 4

Zippo Mutual Fund is one of your best performers. It just announced a year-end distribution of $2.50 per share in capital gains and $4.25 in dividends. Assuming the NAV increased from $31.50 to $43.75, calculate your total annual return.

Accepted Answer

A)  60.32% 
B)  46.87% 
C)  26.95% 
D)  24.53% 
A)  60.32% 
B)  46.87% 
C)  26.95% 
D)  24.53%

Question 5

In what ways do unit investment trusts and real estate investment trusts resemble mutual funds?

Accepted Answer

UITs are a pool of investments, generall

Question 6

For your investment program, you have occasionally been holding a few stocks that you purchased from various brokers. Based on this, which advantages of mutual funds would be appealing to you?

Accepted Answer

A)  diversification 
B)  professional management 
C)  avoidance of bad brokers 
D)  Only A and C 
E)  A, B, and C 
A)  diversification 
B)  professional management 
C)  avoidance of bad brokers 
D)  Only A and C 
E)  A, B, and C

Question 7

Which of the following will affect your capital gains liability?

Accepted Answer

A)  Turnover ratio 
B)  Changes in net asset value 
C)  expense ratio 
D)  All of the above are correct. 
E)  Only A and B are correct. 
A)  Turnover ratio 
B)  Changes in net asset value 
C)  expense ratio 
D)  All of the above are correct. 
E)  Only A and B are correct.

Question 8

All distributions from a mutual fund, whether paid out or reinvested, are taxable in the year in which they occur.

Accepted Answer

A) True 
 B)False

Question 9

What sources of information does Art Keown, your textbook author, recommend when researching mutual fund investing?

Accepted Answer

A)  Yahoo! Finance 
B)  The Wall Street Journal 
C)  MoneyCentral 
D)  Morningstar Mutual Funds 
E)  all of the above 
A)  Yahoo! Finance 
B)  The Wall Street Journal 
C)  MoneyCentral 
D)  Morningstar Mutual Funds 
E)  all of the above

Question 10

Mutual fund shareholders directly own the fund's securities.

Accepted Answer

A) True 
 B)False

Question 11

To obtain information about mutual funds you must always pay a fee.

Accepted Answer

A) True 
 B)False

Question 12

A balanced mutual fund is aimed at investors who want

Accepted Answer

A)  steady income to live on. 
B)  moderate growth in capital. 
C)  moderate stability in their investments. 
D)  All of the above 
E)  None of the above 
A)  steady income to live on. 
B)  moderate growth in capital. 
C)  moderate stability in their investments. 
D)  All of the above 
E)  None of the above

Question 13

Tax-exempt money market mutual funds invest in only very short-term municipal debt.

Accepted Answer

A) True 
 B)False

Question 14

A unit investment trust usually invests in ________ and an REIT always invests in ________.

Accepted Answer

A)  real estate; agency bonds 
B)  real estate; municipal bonds 
C)  real estate; load mutual funds 
D)  municipal bonds; real estate 
E)  municipal bonds; real estate bonds 
A)  real estate; agency bonds 
B)  real estate; municipal bonds 
C)  real estate; load mutual funds 
D)  municipal bonds; real estate 
E)  municipal bonds; real estate bonds

Question 15

When selecting a mutual fund, since past performance doesn't necessarily predict future results, you don't need to look at the fund's past performance.

Accepted Answer

A) True 
 B)False

Question 16

Donel is investing in a mutual fund that really is not as diversified as other funds. It may enjoy good capital gains but is also much riskier when it comes to unsystematic risk. This fund is called a(n) ________ fund.

Accepted Answer

A)  growth-and-income 
B)  sector 
C)  life cycle 
D)  asset allocation 
E)  bond 
A)  growth-and-income 
B)  sector 
C)  life cycle 
D)  asset allocation 
E)  bond

Question 17

The term "open end" mutual fund means that this type of investment company can issue an unlimited number of ownership shares.

Accepted Answer

A) True 
 B)False

Question 18

The potential lower returns on mutual funds versus the potential returns on individual stocks is due to poor performance by the fund managers.

Accepted Answer

A) True 
 B)False

Question 19

Net asset value is determined by taking the total market value of all the securities held by the mutual fund, subtracting out any liabilities, and dividing the result by the number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 20

What are the advantages of index funds?

Accepted Answer

Index funds are set up to mimic or dupli

Mutual funds provide an inexpensive way for investors to diversify and gain access to professional management.

What is the total return for a mutual fund with the following characteristics? Beginning NAV = $55.82 Ending NAV = $70.52 Dividends distributed = $2.25 Capital gains distributed = $3.50

Which of the following are passed on to fund share holders through 12b-1 fees?

Zippo Mutual Fund is one of your best performers. It just announced a year-end distribution of $2.50 per share in capital gains and $4.25 in dividends. Assuming the NAV increased from $31.50 to $43.75, calculate your total annual return.

In what ways do unit investment trusts and real estate investment trusts resemble mutual funds?

For your investment program, you have occasionally been holding a few stocks that you purchased from various brokers. Based on this, which advantages of mutual funds would be appealing to you?

Which of the following will affect your capital gains liability?

All distributions from a mutual fund, whether paid out or reinvested, are taxable in the year in which they occur.

What sources of information does Art Keown, your textbook author, recommend when researching mutual fund investing?

Mutual fund shareholders directly own the fund's securities.

To obtain information about mutual funds you must always pay a fee.

A balanced mutual fund is aimed at investors who want

Tax-exempt money market mutual funds invest in only very short-term municipal debt.

A unit investment trust usually invests in and an REIT always invests in .

When selecting a mutual fund, since past performance doesn't necessarily predict future results, you don't need to look at the fund's past performance.

Donel is investing in a mutual fund that really is not as diversified as other funds. It may enjoy good capital gains but is also much riskier when it comes to unsystematic risk. This fund is called a(n) ________ fund.

The term "open end" mutual fund means that this type of investment company can issue an unlimited number of ownership shares.

The potential lower returns on mutual funds versus the potential returns on individual stocks is due to poor performance by the fund managers.

Net asset value is determined by taking the total market value of all the securities held by the mutual fund, subtracting out any liabilities, and dividing the result by the number of shares outstanding.

What are the advantages of index funds?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 15: Mutual Funds: An Easy Way to Diversify

Mutual funds provide an inexpensive way for investors to diversify and gain access to professional management.

What is the total return for a mutual fund with the following characteristics? Beginning NAV = $55.82 Ending NAV = $70.52 Dividends distributed = $2.25 Capital gains distributed = $3.50

Which of the following are passed on to fund share holders through 12b-1 fees?

Zippo Mutual Fund is one of your best performers. It just announced a year-end distribution of $2.50 per share in capital gains and $4.25 in dividends. Assuming the NAV increased from $31.50 to $43.75, calculate your total annual return.

In what ways do unit investment trusts and real estate investment trusts resemble mutual funds?

For your investment program, you have occasionally been holding a few stocks that you purchased from various brokers. Based on this, which advantages of mutual funds would be appealing to you?

Which of the following will affect your capital gains liability?

All distributions from a mutual fund, whether paid out or reinvested, are taxable in the year in which they occur.

What sources of information does Art Keown, your textbook author, recommend when researching mutual fund investing?

Mutual fund shareholders directly own the fund's securities.

To obtain information about mutual funds you must always pay a fee.

A balanced mutual fund is aimed at investors who want

Tax-exempt money market mutual funds invest in only very short-term municipal debt.

A unit investment trust usually invests in ________ and an REIT always invests in ________.

When selecting a mutual fund, since past performance doesn't necessarily predict future results, you don't need to look at the fund's past performance.

Donel is investing in a mutual fund that really is not as diversified as other funds. It may enjoy good capital gains but is also much riskier when it comes to unsystematic risk. This fund is called a(n) ________ fund.

The term "open end" mutual fund means that this type of investment company can issue an unlimited number of ownership shares.

The potential lower returns on mutual funds versus the potential returns on individual stocks is due to poor performance by the fund managers.

Net asset value is determined by taking the total market value of all the securities held by the mutual fund, subtracting out any liabilities, and dividing the result by the number of shares outstanding.

What are the advantages of index funds?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

A unit investment trust usually invests in and an REIT always invests in .