Question 1

Which of the following is a disadvantage to mutual fund investing?

Accepted Answer

A)  On average they underperform the market returns. 
B)  Costs may be high and vary dramatically from fund to fund. 
C)  Not all mutual funds are truly safe. 
D)  You cannot diversify away systematic risk. 
E)  All of the above. 
A)  On average they underperform the market returns. 
B)  Costs may be high and vary dramatically from fund to fund. 
C)  Not all mutual funds are truly safe. 
D)  You cannot diversify away systematic risk. 
E)  All of the above.

Question 2

Principle 8 tells us that diversification reduces ________.

Accepted Answer

A)  risk 
B)  costs 
C)  profitability 
D)  earnings 
E)  none of the above 
A)  risk 
B)  costs 
C)  profitability 
D)  earnings 
E)  none of the above

Question 3

Exchange traded funds are mutual funds that trade on an exchange just like individual securities and can be bought or sold throughout the trading day.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following funds protect you from systematic risk?

Accepted Answer

A)  S&P 500 Index fund 
B)  Growth fund 
C)  Balanced fund 
D)  All of the above 
E)  None of the above 
A)  S&P 500 Index fund 
B)  Growth fund 
C)  Balanced fund 
D)  All of the above 
E)  None of the above

Question 5

If you want to invest only in the telecommunications industry, which fund would be appropriate for you?

Accepted Answer

A)  S&P 500 Index fund 
B)  Telecommunications sector fund 
C)  Telecommunications ETF 
D)  Telecommunications money market fund 
E)  Both B and C are correct. 
A)  S&P 500 Index fund 
B)  Telecommunications sector fund 
C)  Telecommunications ETF 
D)  Telecommunications money market fund 
E)  Both B and C are correct.

Question 6

Mutual fund fees and expenses will negatively affect the return you receive on your investment.

Accepted Answer

A) True 
 B)False

Question 7

Sometimes, when you purchase shares directly from the mutual fund company itself, there will not be a sales load.

Accepted Answer

A) True 
 B)False

Question 8

For an investor with some speculative money to invest, which fund would be an appropriate choice for potentially large returns?

Accepted Answer

A)  Junk bond fund 
B)  Aggressive growth fund 
C)  High technology sector fund 
D)  All of the above are correct 
E)  Only A and C are correct 
A)  Junk bond fund 
B)  Aggressive growth fund 
C)  High technology sector fund 
D)  All of the above are correct 
E)  Only A and C are correct

Question 9

Explain how a dividend reinvestment plan is similar to compounding and the time value of money.

Accepted Answer

With compounding, the interest you earne

Question 10

One of the advantages of municipal bond funds is that ________.

Accepted Answer

A)  they may be exempt from state taxes 
B)  the interest is generally exempt from federal taxes 
C)  they are all no-load funds 
D)  Both A and B are correct 
A)  they may be exempt from state taxes 
B)  the interest is generally exempt from federal taxes 
C)  they are all no-load funds 
D)  Both A and B are correct

Question 11

Shares in open-end mutual funds are actively traded in secondary markets.

Accepted Answer

A) True 
 B)False

Question 12

Mutual funds sold by a bank are insured by the federal government.

Accepted Answer

A) True 
 B)False

Question 13

You purchased 500 shares in a mutual fund for $32 NAV. You elected the dividend reinvestment plan and had all dividend and capital gains distributions reinvested in additional shares. You just closed your account and sold 550 shares for $48 NAV. What was your total return on this investment?

Accepted Answer

A)  24.03% 
B)  34.29% 
C)  41.44% 
D)  50.86% 
A)  24.03% 
B)  34.29% 
C)  41.44% 
D)  50.86%

Question 14

Prepare a case for investing in a bond fund versus individual bonds.

Accepted Answer

A bond mutual fund suits the small inves

Question 15

Compare and contrast open-end and closed-end mutual funds.

Accepted Answer

Open-end funds can literally issue as ma

Question 16

"Classes" of mutual funds have different fee arrangements attached to them.

Accepted Answer

A) True 
 B)False

Question 17

A mutual fund that does not charge a commission on your ownership shares is referred to as a load fund.

Accepted Answer

A) True 
 B)False

Question 18

Money market mutual funds invest primarily in the stocks of publicly traded companies.

Accepted Answer

A) True 
 B)False

Question 19

When screening mutual funds,two of the best websites are: Morningstar and Yahoo!Finance.

Accepted Answer

A) True 
 B)False

Question 20

The investor services that most mutual funds offer include

Accepted Answer

A)  bookkeeping services. 
B)  checking accounts. 
C)  automatic systems to add to or withdraw from your account. 
D)  All of the above are correct. 
E)  All but B are correct 
A)  bookkeeping services. 
B)  checking accounts. 
C)  automatic systems to add to or withdraw from your account. 
D)  All of the above are correct. 
E)  All but B are correct

Which of the following is a disadvantage to mutual fund investing?

Principle 8 tells us that diversification reduces ________.

Exchange traded funds are mutual funds that trade on an exchange just like individual securities and can be bought or sold throughout the trading day.

Which of the following funds protect you from systematic risk?

If you want to invest only in the telecommunications industry, which fund would be appropriate for you?

Mutual fund fees and expenses will negatively affect the return you receive on your investment.

Sometimes, when you purchase shares directly from the mutual fund company itself, there will not be a sales load.

For an investor with some speculative money to invest, which fund would be an appropriate choice for potentially large returns?

Explain how a dividend reinvestment plan is similar to compounding and the time value of money.

One of the advantages of municipal bond funds is that ________.

Shares in open-end mutual funds are actively traded in secondary markets.

Mutual funds sold by a bank are insured by the federal government.

You purchased 500 shares in a mutual fund for $32 NAV. You elected the dividend reinvestment plan and had all dividend and capital gains distributions reinvested in additional shares. You just closed your account and sold 550 shares for $48 NAV. What was your total return on this investment?

Prepare a case for investing in a bond fund versus individual bonds.

Compare and contrast open-end and closed-end mutual funds.

"Classes" of mutual funds have different fee arrangements attached to them.

A mutual fund that does not charge a commission on your ownership shares is referred to as a load fund.

Money market mutual funds invest primarily in the stocks of publicly traded companies.

When screening mutual funds,two of the best websites are: Morningstar and Yahoo!Finance.

The investor services that most mutual funds offer include

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

Which of the following is a disadvantage to mutual fund investing?

Principle 8 tells us that diversification reduces ________.

Exchange traded funds are mutual funds that trade on an exchange just like individual securities and can be bought or sold throughout the trading day.

Which of the following funds protect you from systematic risk?

If you want to invest only in the telecommunications industry, which fund would be appropriate for you?

Mutual fund fees and expenses will negatively affect the return you receive on your investment.

Sometimes, when you purchase shares directly from the mutual fund company itself, there will not be a sales load.

For an investor with some speculative money to invest, which fund would be an appropriate choice for potentially large returns?

Explain how a dividend reinvestment plan is similar to compounding and the time value of money.

One of the advantages of municipal bond funds is that ________.

Shares in open-end mutual funds are actively traded in secondary markets.

Mutual funds sold by a bank are insured by the federal government.

You purchased 500 shares in a mutual fund for $32 NAV. You elected the dividend reinvestment plan and had all dividend and capital gains distributions reinvested in additional shares. You just closed your account and sold 550 shares for $48 NAV. What was your total return on this investment?

Prepare a case for investing in a bond fund versus individual bonds.

Compare and contrast open-end and closed-end mutual funds.

"Classes" of mutual funds have different fee arrangements attached to them.

A mutual fund that does not charge a commission on your ownership shares is referred to as a load fund.

Money market mutual funds invest primarily in the stocks of publicly traded companies.

When screening mutual funds,two of the best websites are: Morningstar and Yahoo!Finance.

The investor services that most mutual funds offer include

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