Question 1

Karen and Jon-Nathaniel Bild just inherited $30,000 and would like to invest the money in a conservative mutual fund. Since they have never invested in mutual funds, they ask for your help. In your own words, describe the factors that can be used to evaluate a mutual fund investment.

Accepted Answer

The answer of Karen and Jon-Nathaniel Bild just inherited $30,000...

Question 2

Which of the following statements is false?

Accepted Answer

A)  Most investors in mutual funds will tell you that the most important consideration in evaluating a mutual fund is long-term performance. 
B)  It is possible to compare a fund's long-term performance with the performance of the TSE 300 stock index. 
C)  The length of time a fund's manager has been managing a fund should not be considered when evaluating a fund because the investment company has the right to replace a fund manager. 
D)  Long-term performance should not be the only factor that you consider in evaluating a mutual fund. 
E)  Information on a fund's long-term performance is available in its prospectus and in other sources of financial information.

Question 3

A load fund is a mutual fund in which investors pay a commission every time they sell or buy shares.

Accepted Answer

A) True 
 B)False

Question 4

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 5

The Capitalist Mutual Fund's portfolio is valued at $55 million. The fund has liabilities of $4 million, and the investment company sponsoring the fund has issued 2,400,000 shares. What is the fund's net asset value?

Accepted Answer

A)  $100 
B)  $21.25 
C)  $22.91 
D)  $24.58 
E)  $1

Question 6

A mutual fund that invests in common stocks and bonds with the primary objective of earning tax-advantaged income is called a(n) ____________ fund.

Accepted Answer

A)  balanced 
B)  capital growth 
C)  dividend 
D)  income 
E)  money market

Question 7

A 1 to 6 percent fee that investors pay when they withdraw their investment from a mutual fund is called a(n)

Accepted Answer

A)  contingent deferred sales load. 
B)  sales fee. 
C)  withdrawal fee. 
D)  unload fee. 
E)  load fee.

Question 8

In a newspaper quotation, which of the following letters would indicate if a mutual fund has a front-end and a back-end fee?

Accepted Answer

A)  N 
B)  R 
C)  FR 
D)  B 
E)  It is impossible to tell if there is a front-end and a back-end fee by looking in the newspaper.

Question 9

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 Economist

Question 10

The Marginal Mutual Fund's portfolio is valued at $50 million. The fund has liabilities of $10 million, and the investment company sponsoring the fund has issued 2,000,000 shares. What is the fund's net asset value per share?

Accepted Answer

A)  $4.00 
B)  $5.00 
C)  $20.00 
D)  $25.00 
E)  $1.50

Question 11

For a mutual fund, the typical yearly management fee ranges from 2.5 to 5 percent of total dollar amount invested.

Accepted Answer

A) True 
 B)False

Question 12

Even though they are under professional management, the individual investor to should evaluate a mutual fund investment.

Accepted Answer

A) True 
 B)False

Question 13

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 6 1/2 
E)  7 to 8 1/2

Question 14

A mutual fund in which investors pay a commission every time they purchase shares is called a(n) ____________ fund.

Accepted Answer

A)  closed-end 
B)  open-end 
C)  no-load 
D)  load 
E)  convertible

Question 15

Mutual funds that invest in smaller, lesser known companies that offer higher growth potential are referred to as dividend funds.

Accepted Answer

A) True 
 B)False

Question 16

The net asset value for a mutual fund share is calculated by dividing the value of the fund's portfolio by the fund's liabilities.

Accepted Answer

A) True 
 B)False

Question 17

A mutual fund in which shares are issued only when the fund is organized is called a(n) ____________ fund.

Accepted Answer

A)  closed-end 
B)  open-end 
C)  load 
D)  no-load 
E)  convertible

Question 18

The managers of mutual funds tailor their investment portfolios to the investment objectives of their customers.

Accepted Answer

A) True 
 B)False

Question 19

A mutual fund that seeks to make investment decisions that are guided by moral criteria that can vary from fund to fund is __________________

Accepted Answer

A)  a balanced asset allocation fund 
B)  a money market fund 
C)  an equity or common stock fund 
D)  a real estate mutual fund 
E)  an ethical fund

Question 20

Income dividends and capital gain distributions are

Accepted Answer

A)  exempt from taxation. 
B)  subject to federal taxation. 
C)  subject to federal taxation after the first $1,000. 
D)  subject to federal taxation after the first $2,000. 
E)  subject to federal taxation after the first $8,000.

Exam 13: Investing in Mutual Funds

Karen and Jon-Nathaniel Bild just inherited $30,000 and would like to invest the money in a conservative mutual fund. Since they have never invested in mutual funds, they ask for your help. In your own words, describe the factors that can be used to evaluate a mutual fund investment.

Which of the following statements is false?

A load fund is a mutual fund in which investors pay a commission every time they sell or buy shares.

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

The Capitalist Mutual Fund's portfolio is valued at $55 million. The fund has liabilities of $4 million, and the investment company sponsoring the fund has issued 2,400,000 shares. What is the fund's net asset value?

A mutual fund that invests in common stocks and bonds with the primary objective of earning tax-advantaged income is called a(n) ____________ fund.

A 1 to 6 percent fee that investors pay when they withdraw their investment from a mutual fund is called a(n)

In a newspaper quotation, which of the following letters would indicate if a mutual fund has a front-end and a back-end fee?

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

The Marginal Mutual Fund's portfolio is valued at $50 million. The fund has liabilities of $10 million, and the investment company sponsoring the fund has issued 2,000,000 shares. What is the fund's net asset value per share?

For a mutual fund, the typical yearly management fee ranges from 2.5 to 5 percent of total dollar amount invested.

Even though they are under professional management, the individual investor to should evaluate a mutual fund investment.

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

A mutual fund in which investors pay a commission every time they purchase shares is called a(n) ____________ fund.

Mutual funds that invest in smaller, lesser known companies that offer higher growth potential are referred to as dividend funds.

The net asset value for a mutual fund share is calculated by dividing the value of the fund's portfolio by the fund's liabilities.

A mutual fund in which shares are issued only when the fund is organized is called a(n) ____________ fund.

The managers of mutual funds tailor their investment portfolios to the investment objectives of their customers.

A mutual fund that seeks to make investment decisions that are guided by moral criteria that can vary from fund to fund is __________________

Income dividends and capital gain distributions are