Question 1

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 2

Nathan Fuller is buying shares in a mutual fund that invests in the same companies as those found in the S&P 500 and in roughly the same proportion.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) D) and E)
G) C) and D)

Question 3

Which one of the following funds would be considered the safest investment?

Accepted Answer

A)  growth fund
B)  money market fund
C)  sector fund
D)  asset allocation fund
E)  high-yield bond fundF) B) and C)
G) A) and C)

Question 4

To purchase shares in an open-end fund,you may use four options: regular accounts,voluntary savings plans,contractual savings plans,and reinvestment plans.

Accepted Answer

A) True 
 B)False

Question 5

Louise Prescott is buying shares in a mutual fund that invests in companies expecting higher than average revenues and earnings growth.What type of mutual fund is she buying?

Accepted Answer

A)  socially responsible fund
B)  sector fund
C)  small-cap fund
D)  index fund
E)  growth fundF) B) and D)
G) B) and C)

Question 6

If an investor uses a reinvestment plan to invest income dividends and capital- gain distributions:

Accepted Answer

A)  then both the income dividends and capital-gain distributions are tax-exempt.
B)  only the income dividends are tax-exempt.
C)  only the capital-gain distributions are tax-exempt.
D)  both the income dividends and capital-gain distributions are currently taxable.
E)  then both the income dividends and capital-gain distributions will be tax-deferred.F) B) and D)
G) A) and B)

Question 7

An exchange-traded fund,commonly referred to as an ETF is a fund that invests in the stocks contained in a specific stock or securities index.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following statements is true?

Accepted Answer

A)  Most mutual funds are managed funds.
B)  The role of a fund manager is not important because the investment company is always changing managers.
C)  You should ignore fees when comparing mutual funds.
D)  Managed funds are usually index funds.
E)  A team of managers is always better than a single fund manager.F) B) and D)
G) A) and E)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The fund manager is ultimately responsible for a fund's success.

Accepted Answer

A) True 
 B)False

Question 11

Will Hopkins is getting ready to purchase shares in a mutual fund.He will have to pay an upfront sales commission to purchase these shares.What type of shares is he buying?

Accepted Answer

A)  class A
B)  class B
C)  class C
D)  either class A or B
E)  either class B or CF) None of the above
G) All of the above

Question 12

Today,there are more closed-end funds than there are open-end funds.

Accepted Answer

A) True 
 B)False

Question 13

A load fund is a mutual fund in which investors pay a commission either when they purchase or when they redeem shares.

Accepted Answer

A) True 
 B)False

Question 14

Cindy and John Appleby 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 sources of information available for evaluating a mutual fund investment.

Accepted Answer

The following factors can be used to eva...

Question 15

Tax information for mutual funds is reported as part of the year-end statement or IRS Form 1099-DIV.

Accepted Answer

A) True 
 B)False

Question 16

A municipal bond fund:

Accepted Answer

A)  is too risky for most investors.
B)  provides investors with federally tax-free interest income.
C)  invests in bonds that are backed by the federal government.
D)  is a risk-free investment.
E)  invests solely in Treasury bonds.F) B) and E)
G) A) and B)

Question 17

During 2008,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) B) and D)
G) D) and E)

Question 18

The average management fee for all mutual funds is:

Accepted Answer

A)  less than 0.25 percent.
B)  0.25 percent to 0.50 percent.
C)  0.50 to 1 percent.
D)  1.25 to 2.50 percent.
E)  2.50 to 5.00 percent.F) B) and E)
G) B) and D)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Your parents 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

Students may choose from the following a...

Exam 16: Investing in Mutual Funds

Tax information for mutual funds is reported as part of the year-end statement or IRS Form 1099-DIV.

Correct AnswerverifiedShow Answer

Today,there are more closed-end funds than there are open-end funds.

Correct AnswerverifiedShow Answer

If an investor uses a reinvestment plan to invest income dividends and capital- gain distributions:

Correct AnswerverifiedShow Answer

Nathan Fuller is buying shares in a mutual fund that invests in the same companies as those found in the S&P 500 and in roughly the same proportion.What type of mutual fund is he buying?

Correct AnswerverifiedShow Answer

During 2008,Lincoln Masters received income dividends of $850 and capital gain distributions of $540.Based on this information:

Correct AnswerverifiedShow Answer

The fund manager is ultimately responsible for a fund's success.

Correct AnswerverifiedShow Answer

A load fund is a mutual fund in which investors pay a commission either when they purchase or when they redeem shares.

Correct AnswerverifiedShow Answer

Cindy and John Appleby 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 sources of information available for evaluating a mutual fund investment.

Correct AnswerverifiedThe following factors can be used to eva...View AnswerShow Answer

An exchange-traded fund,commonly referred to as an ETF is a fund that invests in the stocks contained in a specific stock or securities index.

Correct AnswerverifiedShow Answer

Which one of the following funds would be considered the safest investment?

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

Will Hopkins is getting ready to purchase shares in a mutual fund.He will have to pay an upfront sales commission to purchase these shares.What type of shares is he buying?

Correct AnswerverifiedShow Answer

To purchase shares in an open-end fund,you may use four options: regular accounts,voluntary savings plans,contractual savings plans,and reinvestment plans.

Correct AnswerverifiedShow Answer

Louise Prescott is buying shares in a mutual fund that invests in companies expecting higher than average revenues and earnings growth.What type of mutual fund is she buying?

Correct AnswerverifiedShow Answer

A municipal bond fund:

Correct AnswerverifiedShow Answer

Your parents 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 AnswerverifiedStudents may choose from the following a...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The average management fee for all mutual funds is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The following factors can be used to eva...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Students may choose from the following a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified