Question 1

You should consider your tolerance for risk before investing in mutual funds.

Accepted Answer

A) True 
 B)False

Question 2

When an investor purchases shares in a load fund,the average load charge is between ________ percent.

Accepted Answer

A)  0.5 to 2
B)  1 and 2
C)  3 and 5
D)  4 and 6
E)  5 and 7F) A) and B)
G) None of the above

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is an advantage associated with purchasing a mutual fund?

Accepted Answer

A)  No fund management fees
B)  Ability to control the timing of the capital gains distributions
C)  Total elimination of market risk
D)  Switching privileges within the same fund family
E)  Purchase/withdrawal costsF) All of the above
G) B) and D)

Question 5

Today many investors use firms like ________ to create a financial plan to generate the income needed to satisfy their long-term goals?

Accepted Answer

A)  New American Frontiers
B)  NASDAQ
C)  Dow Jones Industrial Average
D)  Morgan Stanley
E)  Standard & Poor's indexF) C) and E)
G) A) and E)

Question 6

Which type of mutual fund invests in corporate bonds with maturities in excess of 10 years?

Accepted Answer

A)  Junk bond fund
B)  Long-term corporate bond fund
C)  Municipal bond fund
D)  Short-term government bond fund
E)  World bond fundF) None of the above
G) A) and E)

Question 7

You are considering the purchase of shares in a mutual fund.Discuss three advantages and three disadvantages of mutual fund investing that you believe are important for potential investors to consider.

Accepted Answer

Answers will vary.
ADVANTAGES OF MUTUAL ...

Question 8

An investment company sponsoring a mutual fund must give potential investors a(n) :

Accepted Answer

A)  12b
B)  prospectus.
C)  disclosure/evaluation form.
D)  redemption fee sheet.
E)  annual report.F) A) and B)
G) B) and D)

Question 9

What are seven steps you can take to open an investment account and begin investing in mutual funds?

Accepted Answer

1.Determine your investment goals and pe...

Question 10

There are more investment companies that offer exchange-traded funds than there are that offer open-end mutual funds.

Accepted Answer

A) True 
 B)False

Question 11

At the beginning of 2018,there were almost 12,000 investment companies sponsoring mutual funds.

Accepted Answer

A) True 
 B)False

Question 12

To purchase shares in an open-end mutual fund from an investment company,you may use four options: regular account transactions,voluntary savings plans,contractual savings plans,and reinvestment plans.

Accepted Answer

A) True 
 B)False

Question 13

Nathan Fuller is buying shares in a mutual fund that invests in the same companies as those found in the Standard & Poor's 500.What type of mutual fund is he buying?

Accepted Answer

A)  Socially responsible fund
B)  Sector fund
C)  Small cap fund
D)  Index fund
E)  Growth fundF) B) and C)
G) B) and E)

Question 14

Many investors will access a fund's ________ by using the internet.It includes a letter from the fund's independent auditors that provides an opinion as to the accuracy of the fund's financial statements.

Accepted Answer

A)  annual report
B)  12b
C)  annual prospectus
D)  annual summary report from the president of the investment company
E)  copy of the annual mutual funds report containing a summary of the professional advisory services commentsF) A) and B)
G) B) and E)

Question 15

A municipal bond fund:

Accepted Answer

A)  is too risky for most investors.
B)  invests in municipal bond mutual funds.
C)  invests in bonds that are backed by the federal government.
D)  is a risk-free investment.
E)  invests solely in Treasury bonds.F) C) and D)
G) D) and E)

Question 16

Mutual funds have been around for a long time and became popular in the U.S.before the Great Depression in 1929.

Accepted Answer

A) True 
 B)False

Question 17

Why do investors purchase mutual funds instead of purchasing stocks,bonds,or other investments on their own?

Accepted Answer

The major reasons investors purchase mut...

Question 18

During 2017,Lincoln Masters received income dividends of $850 and capital gain distributions of $540.Based on this information:

Accepted Answer

A)  both amounts must be included as taxable income.
B)  only the dividends are taxable.
C)  only the capital gains are taxable.
D)  both amounts are tax-exempt.
E)  both amounts are taxed at a rate of 5 percent.F) A) and C)
G) A) and D)

Question 19

The fund manager is ultimately responsible for a fund's success,because he/she decides when to buy or sell securities in the fund.

Accepted Answer

A) True 
 B)False

Question 20

A mutual fund in which investors pay a commission every time they purchase shares is called a ________ fund.

Accepted Answer

A)  closed-end
B)  open-end
C)  load
D)  no-load
E)  convertibleF) B) and C)
G) A) and B)

Exam 16: Investing in Mutual Funds

You should consider your tolerance for risk before investing in mutual funds.

Correct AnswerverifiedShow Answer

Which type of mutual fund invests in corporate bonds with maturities in excess of 10 years?

Correct AnswerverifiedShow Answer

Today many investors use firms like ________ to create a financial plan to generate the income needed to satisfy their long-term goals?

Correct AnswerverifiedShow Answer

To purchase shares in an open-end mutual fund from an investment company,you may use four options: regular account transactions,voluntary savings plans,contractual savings plans,and reinvestment plans.

Correct AnswerverifiedShow Answer

During 2017,Lincoln Masters received income dividends of $850 and capital gain distributions of $540.Based on this information:

Correct AnswerverifiedShow Answer

Why do investors purchase mutual funds instead of purchasing stocks,bonds,or other investments on their own?

Correct AnswerverifiedThe major reasons investors purchase mut...View AnswerShow Answer

An investment company sponsoring a mutual fund must give potential investors a(n) :

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A mutual fund in which investors pay a commission every time they purchase shares is called a ________ fund.

Correct AnswerverifiedShow Answer

Many investors will access a fund's ________ by using the internet.It includes a letter from the fund's independent auditors that provides an opinion as to the accuracy of the fund's financial statements.

Correct AnswerverifiedShow Answer

The fund manager is ultimately responsible for a fund's success,because he/she decides when to buy or sell securities in the fund.

Correct AnswerverifiedShow Answer

When an investor purchases shares in a load fund,the average load charge is between ________ percent.

Correct AnswerverifiedShow Answer

At the beginning of 2018,there were almost 12,000 investment companies sponsoring mutual funds.

Correct AnswerverifiedShow Answer

There are more investment companies that offer exchange-traded funds than there are that offer open-end mutual funds.

Correct AnswerverifiedShow Answer

Which of the following is an advantage associated with purchasing a mutual fund?

Correct AnswerverifiedShow Answer

What are seven steps you can take to open an investment account and begin investing in mutual funds?

Correct Answerverified1.Determine your investment goals and pe...View AnswerShow Answer

You are considering the purchase of shares in a mutual fund.Discuss three advantages and three disadvantages of mutual fund investing that you believe are important for potential investors to consider.

Correct AnswerverifiedAnswers will vary.ADVANTAGES OF MUTUAL ...View AnswerShow Answer

Mutual funds have been around for a long time and became popular in the U.S.before the Great Depression in 1929.

Correct AnswerverifiedShow Answer

Nathan Fuller is buying shares in a mutual fund that invests in the same companies as those found in the Standard & Poor's 500.What type of mutual fund is he buying?

Correct AnswerverifiedShow Answer

A municipal bond fund:

Correct AnswerverifiedShow Answer

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The major reasons investors purchase mut...
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1.Determine your investment goals and pe...
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Answers will vary.
ADVANTAGES OF MUTUAL ...
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Correct Answer
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