Question 1

Shares in a close-end fund are redeemed by the investment company at the request of the investor.

Accepted Answer

A) True 
 B)False

Question 2

A mutual fund that requires investors to make regular purchases over a specified period of time is called a

Accepted Answer

A)  regular account.
B)  voluntary savings plan.
C)  contractual savings plan.
D)  minimum withdrawal plan.
E)  free contract plan.F) A) and D)
G) B) and E)

Question 3

What type of fund seeks to aim for safety of principal and income but are subject to capital gains and losses, which have tax implications?

Accepted Answer

A)  Money market
B)  Mortgage
C)  Bond
D)  Dividend
E)  BalancedF) A) and D)
G) D) and E)

Question 4

What types of mutual funds are the most popular in Canada as of May 2017?

Accepted Answer

A)  Balanced
B)  Equity
C)  Specialty
D)  Bond
E)  Short-termF) A) and E)
G) A) and D)

Question 5

An investment company sponsoring a mutual fund must give potential investors a

Accepted Answer

A)  analytical purchase report.
B)  prospectus.
C)  disclosure/evaluation form.
D)  redemption fee sheet.
E)  copy of the annual mutual funds evaluation provided by Changing Times magazine.F) B) and C)
G) None of the above

Question 6

Index funds are bought at beginning-of-day prices.

Accepted Answer

A) True 
 B)False

Question 7

For most mutual funds, the net asset value is calculated:

Accepted Answer

A)  daily.
B)  quarterly.
C)  weekly.
D)  yearly.
E)  whenever an investor calls and requests a price quote.F) All of the above
G) C) and D)

Question 8

The diversification of mutual funds spells safety, because an occasional loss incurred with one investment is usually offset by gains from other investments.

Accepted Answer

A) True 
 B)False

Question 9

Capital gain distributions are the payments made to a fund's shareholders that result from the sale of securities in the fund's portfolio.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is false?

Accepted Answer

A)  Investors purchase mutual funds for diversification.
B)  Investors purchase mutual funds because of professional management.
C)  Investors who purchase mutual funds are guaranteed a higher rate of return than a comparable investment in stocks or bonds.
D)  Professional mutual fund managers work for an investment company.
E)  Even the best portfolio managers sometimes make mistakes.F) A) and C)
G) A) and B)

Question 11

The least liquid of all the types of mutual funds 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 fundF) A) and C)
G) C) and D)

Question 12

Morgan Phelps just purchased 200 shares in the Green Fidelity Fund.The purchase cost for each share was $40.If this fund charges a 6 percent load, what is the total amount of commission he will pay the investment company?

Accepted Answer

A)  $200
B)  $240
C)  $400
D)  $480
E)  No commission is chargedF) All of the above
G) A) and D)

Question 13

What type of fund seeks to aim to provide a mixture of safety, income, and capital appreciation?

Accepted Answer

A)  Money market
B)  Mortgage
C)  Bond
D)  Dividend
E)  BalancedF) B) and C)
G) A) and E)

Question 14

A closed-end fund is a mutual fund in which shares are issued only when the fund is organized.

Accepted Answer

A) True 
 B)False

Question 15

While mutual fund income dividends are subject to taxation, capital gain distributions are not subject to taxation.

Accepted Answer

A) True 
 B)False

Question 16

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 marketF) B) and C)
G) A) and E)

Question 17

Capital gain distributions result when you decide to sell shares in a mutual fund at a price higher than you paid.

Accepted Answer

A) True 
 B)False

Question 18

In an open-end fund, investors pay a commission (as high as 8.5 percent) every time they purchase or sell shares.

Accepted Answer

A) True 
 B)False

Question 19

When one investment company manages a group of mutual funds, it is called a(n) :

Accepted Answer

A)  exchange fund.
B)  family of funds.
C)  diversification fund.
D)  versatility fund.
E)  group of funds.F) A) and E)
G) A) and B)

Question 20

What is step 5 of the common steps used by investors to evaluate mutual funds?

Accepted Answer

A)  Perform a financial checkup to make sure you are ready to invest.
B)  Obtain the money you need to purchase mutual funds.
C)  Determine your investment objectives.
D)  Find a fund with an objective that matches your objective.
E)  Evaluate, evaluate, and evaluate any mutual fund before buying or selling.F) B) and D)
G) A) and E)

Exam 13: Investing in Mutual Funds

Capital gain distributions result when you decide to sell shares in a mutual fund at a price higher than you paid.

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Index funds are bought at beginning-of-day prices.

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The diversification of mutual funds spells safety, because an occasional loss incurred with one investment is usually offset by gains from other investments.

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For most mutual funds, the net asset value is calculated:

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What type of fund seeks to aim to provide a mixture of safety, income, and capital appreciation?

Correct AnswerverifiedShow Answer

What type of fund seeks to aim for safety of principal and income but are subject to capital gains and losses, which have tax implications?

Correct AnswerverifiedShow Answer

A closed-end fund is a mutual fund in which shares are issued only when the fund is organized.

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When one investment company manages a group of mutual funds, it is called a(n) :

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Shares in a close-end fund are redeemed by the investment company at the request of the investor.

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Capital gain distributions are the payments made to a fund's shareholders that result from the sale of securities in the fund's portfolio.

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While mutual fund income dividends are subject to taxation, capital gain distributions are not subject to taxation.

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The least liquid of all the types of mutual funds is __________________

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What is step 5 of the common steps used by investors to evaluate mutual funds?

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

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Morgan Phelps just purchased 200 shares in the Green Fidelity Fund.The purchase cost for each share was $40.If this fund charges a 6 percent load, what is the total amount of commission he will pay the investment company?

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In an open-end fund, investors pay a commission (as high as 8.5 percent) every time they purchase or sell shares.

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Which of the following statements is false?

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An investment company sponsoring a mutual fund must give potential investors a

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What types of mutual funds are the most popular in Canada as of May 2017?

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A mutual fund that requires investors to make regular purchases over a specified period of time is called a

Correct AnswerverifiedShow Answer

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