Question 1

Which statement is not true about index funds as compared to actively managed funds?

Accepted Answer

A)  They have lower expense ratios 
B)  They tend to be less profitable than actively managed funds 
C)  They usually have lower turnover in buying and selling assets than actively managed funds 
D)  They tend to have lower capital gains tax than actively managed assets because the assets are usually held longer before being sold 
A)  They have lower expense ratios 
B)  They tend to be less profitable than actively managed funds 
C)  They usually have lower turnover in buying and selling assets than actively managed funds 
D)  They tend to have lower capital gains tax than actively managed assets because the assets are usually held longer before being sold B

Question 2

How do index funds keep their expense ratios low?

Accepted Answer

A)  They trade stocks often for maximum gains 
B)  They maintain their holdings in the same proportion as well-known indexes 
C)  They have a team of professionals watch for the best options so as to continually tune the fund's performance 
D)  They hold less than 20 companies in the fund 
A)  They trade stocks often for maximum gains 
B)  They maintain their holdings in the same proportion as well-known indexes 
C)  They have a team of professionals watch for the best options so as to continually tune the fund's performance 
D)  They hold less than 20 companies in the fund B

Question 3

What does NAV measure?

Accepted Answer

A)  The total value of all the assets in the mutual fund minus cost,divided by the number of shares outstanding 
B)  The total value of all assets divided by cost over the number of shares outstanding 
C)  The total costs over shares multiplied by the value of assets 
D)  The net of all assets in the mutual fund minus cost 
A)  The total value of all the assets in the mutual fund minus cost,divided by the number of shares outstanding 
B)  The total value of all assets divided by cost over the number of shares outstanding 
C)  The total costs over shares multiplied by the value of assets 
D)  The net of all assets in the mutual fund minus cost A

Question 4

A(n)_________________ is a sales charge that can be charged when investments are made in the fund or when money is withdrawn from the fund.

Accepted Answer

A)  Fund fee 
B)  Load 
C)  Expense ratio 
D)  Transaction fee 
A)  Fund fee 
B)  Load 
C)  Expense ratio 
D)  Transaction fee

Question 5

Exchange-traded funds are like mutual funds in that they are often structured as an open-end investment company,but they also resemble stock as they are traded throughout the day on a stock exchange.

Accepted Answer

A) True 
 B)False

Question 6

_________________ is (are)the most significant cost of a mutual fund.

Accepted Answer

A)  Transaction fees 
B)  Price 
C)  Loads 
D)  Taxes 
A)  Transaction fees 
B)  Price 
C)  Loads 
D)  Taxes

Question 7

_________________ is a market-performance measurement index,derived from the stock of 500 large companies on the U.S.market; it is designed to be a leading indicator of U.S.equities and is intended to reflect the risk/return characteristics of the large-cap companies.

Accepted Answer

A)  Standard & Poor's 500 
B)  Standard & Poor's 2000 
C)  Russell 500 
D)  Russell 2000 
A)  Standard & Poor's 500 
B)  Standard & Poor's 2000 
C)  Russell 500 
D)  Russell 2000

Question 8

All mutual funds have an expense ratio; however,there are no-load funds as well as funds with loads.

Accepted Answer

A) True 
 B)False

Question 9

Which is not a major benefit of a mutual fund?

Accepted Answer

A)  No risk 
B)  Low initial investment 
C)  Diversification 
D)  Dividend and capital gains reinvestment 
A)  No risk 
B)  Low initial investment 
C)  Diversification 
D)  Dividend and capital gains reinvestment

Question 10

All mutual funds have an expense ratio,which they use to assess the owners of the mutual fund operating expenses.

Accepted Answer

A) True 
 B)False

Question 11

When are mutual fund buy and sell orders executed?

Accepted Answer

A)  At the beginning of each business day 
B)  At the end of the business day 
C)  Upon receipt 
D)  Within 10 business days 
A)  At the beginning of each business day 
B)  At the end of the business day 
C)  Upon receipt 
D)  Within 10 business days

Question 12

List the benefits of mutual funds.

Accepted Answer

The major benefits of owning a mutual fu

Question 13

What are the two main fees associated with a mutual fund?

Accepted Answer

A)  Open- and closed-end fees 
B)  Front and end load fees 
C)  Expense ratios and loads 
D)  Transaction fees and taxes 
A)  Open- and closed-end fees 
B)  Front and end load fees 
C)  Expense ratios and loads 
D)  Transaction fees and taxes

Question 14

_________________ are funds that invest in international and domestic companies.

Accepted Answer

A)  Global funds 
B)  International funds 
C)  Exclusive funds 
D)  Balanced mutual funds 
A)  Global funds 
B)  International funds 
C)  Exclusive funds 
D)  Balanced mutual funds

Question 15

_________________ are funds with a combination of stocks,bonds,and cash.

Accepted Answer

A)  Global funds 
B)  International funds 
C)  Exclusive funds 
D)  Balanced mutual funds 
A)  Global funds 
B)  International funds 
C)  Exclusive funds 
D)  Balanced mutual funds

Question 16

All open-end mutual funds _________________.

Accepted Answer

A)  Open up for investors to add new money at the end of each quarter 
B)  Are priced based on the net asset value (NAV)of the fund 
C)  Became popular in the 1920s 
D)  Do not charge a commission 
A)  Open up for investors to add new money at the end of each quarter 
B)  Are priced based on the net asset value (NAV)of the fund 
C)  Became popular in the 1920s 
D)  Do not charge a commission

Question 17

Explain how mutual funds are classified.

Accepted Answer

Mutual funds are first classified as eit

Question 18

What do the axes on the Morningstar Style Box indicate?

Accepted Answer

A)  The vertical axis shows whether the mutual fund holds the stocks of large,medium,or small capitalized companies 
B)  The horizontal axis is based on company valuation,whether the stocks are from value-based companies (based on the price/earnings ratio),growth companies,or a blend of value and growth 
C)  Both options are correct 
D)  Neither option is correct 
A)  The vertical axis shows whether the mutual fund holds the stocks of large,medium,or small capitalized companies 
B)  The horizontal axis is based on company valuation,whether the stocks are from value-based companies (based on the price/earnings ratio),growth companies,or a blend of value and growth 
C)  Both options are correct 
D)  Neither option is correct

Question 19

_________________ is a market-performance measurement index,derived from the stock of the 2,000 smallest companies on the U.S.market.

Accepted Answer

A)  Standard & Poor's 500 
B)  Standard & Poor's 2000 
C)  Russell 500 
D)  Russell 2000 
A)  Standard & Poor's 500 
B)  Standard & Poor's 2000 
C)  Russell 500 
D)  Russell 2000

Question 20

Measuring fund performance against the S&P 500 can show the consistency of the fund's returns; only about _________________ of the fund managers beat the S&P 500 consistently and they usually have higher expense ratios than index funds.

Accepted Answer

A)  5% 
B)  10% 
C)  15% 
D)  25% 
A)  5% 
B)  10% 
C)  15% 
D)  25%

Which statement is not true about index funds as compared to actively managed funds?

How do index funds keep their expense ratios low?

What does NAV measure?

A(n)_________________ is a sales charge that can be charged when investments are made in the fund or when money is withdrawn from the fund.

Exchange-traded funds are like mutual funds in that they are often structured as an open-end investment company,but they also resemble stock as they are traded throughout the day on a stock exchange.

_________________ is (are)the most significant cost of a mutual fund.

_________________ is a market-performance measurement index,derived from the stock of 500 large companies on the U.S.market; it is designed to be a leading indicator of U.S.equities and is intended to reflect the risk/return characteristics of the large-cap companies.

All mutual funds have an expense ratio; however,there are no-load funds as well as funds with loads.

Which is not a major benefit of a mutual fund?

All mutual funds have an expense ratio,which they use to assess the owners of the mutual fund operating expenses.

When are mutual fund buy and sell orders executed?

List the benefits of mutual funds.

What are the two main fees associated with a mutual fund?

_________________ are funds that invest in international and domestic companies.

_________________ are funds with a combination of stocks,bonds,and cash.

All open-end mutual funds _________________.

Explain how mutual funds are classified.

What do the axes on the Morningstar Style Box indicate?

_________________ is a market-performance measurement index,derived from the stock of the 2,000 smallest companies on the U.S.market.

Measuring fund performance against the S&P 500 can show the consistency of the fund's returns; only about _________________ of the fund managers beat the S&P 500 consistently and they usually have higher expense ratios than index funds.

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Exam 12: Mutual Funds

Which statement is not true about index funds as compared to actively managed funds?

How do index funds keep their expense ratios low?

What does NAV measure?

A(n)_________________ is a sales charge that can be charged when investments are made in the fund or when money is withdrawn from the fund.

Exchange-traded funds are like mutual funds in that they are often structured as an open-end investment company,but they also resemble stock as they are traded throughout the day on a stock exchange.

_________________ is (are)the most significant cost of a mutual fund.

_________________ is a market-performance measurement index,derived from the stock of 500 large companies on the U.S.market; it is designed to be a leading indicator of U.S.equities and is intended to reflect the risk/return characteristics of the large-cap companies.

All mutual funds have an expense ratio; however,there are no-load funds as well as funds with loads.

Which is not a major benefit of a mutual fund?

All mutual funds have an expense ratio,which they use to assess the owners of the mutual fund operating expenses.

When are mutual fund buy and sell orders executed?

List the benefits of mutual funds.

What are the two main fees associated with a mutual fund?

_________________ are funds that invest in international and domestic companies.

_________________ are funds with a combination of stocks,bonds,and cash.

All open-end mutual funds _________________.

Explain how mutual funds are classified.

What do the axes on the Morningstar Style Box indicate?

_________________ is a market-performance measurement index,derived from the stock of the 2,000 smallest companies on the U.S.market.

Measuring fund performance against the S&P 500 can show the consistency of the fund's returns; only about _________________ of the fund managers beat the S&P 500 consistently and they usually have higher expense ratios than index funds.

Money Matters: Values, Vision, Mission, and You

Time Value of Money

Planning and Budgeting

Financial Instruments and Institutions

Consumer Credit: Credit Cards and Student Loans

Credit Bureau Reports and Identity Theft

Auto and Home Loans

Debt, Foreclosure, and Bankruptcy

Tax Management

Insurance: Covering Your Assets

Investment Basics

Stocks

Bonds

Real Estate Investments

Retirement and Estate Planning

Financial Planning for Life

Filters