Mutual Funds: Quiz

Rauol made an investment in 155 shares of stock in a load fund for $3,117.05. After one year the stock had a net asset value of $18.35 per share. If Rauol redeems all 155 shares, which of the following is a correct statement?

Not b. Rauol will have a profit of $272.80.

Use the information in the table below to answer the following question. Name of Fund NAV Offer Price Upton Group $18.47 $18.96 Green Energy $17.29 $18.01 TJH Small-Cap $18.43 $19.05 WHI Health $20.96 NL Tracy buys 150 shares of Upton Group and 100 shares of WHI Health. What is Tracy's total investment?

a. $4,940.00

Use the information in the table below to answer the following question. Name of Fund NAV Offer Price Upton Group $18.47 $18.96 Green Energy $17.29 $18.01 TJH Small-Cap $18.43 $19.05 WHI Health $20.96 NL For which of the funds shown would you pay the most commission on the purchase of 100 shares?

a. Green Energy

Why would a mutual fund, a collection of stocks, bonds, and other securities, have less risk than investing in stocks alone?

a. Stocks are higher risk than most other securities in a mutual fund, but when averaged with the risk of the other securities, mutual fund risk is not as high as stock risk.

A married couple buys 280 shares of stock for a total investment of $8,722. They decide to sell all of their shares in the fund at the listing value shown below. Name of Fund NAV Offer Price CEH Mid-Cap $31.05 $31.20 Determine if the couple makes a profit or loss, and how much per share.

a. loss of $0.05 per share

Chyra redeemed 175 shares of stock she owned in the fund shown below. Name of Fund NAV Offer Price CAH Group $15.83 $16.27 What were Chyra's proceeds?

b. $2,770.25

A certain mutual fund has net assets of $1,359,600. One share of this fund has a net asset value of $11.33. How many shares make up the fund?

b. 120,000

Mark buys 250 shares of stock in a fund with a net asset value of $25.17 and an offer price of $25.30. Mark wants to sell all of his shares when he can profit $1,000. If Mark sells his shares today, he would have proceeds of $7,300. Determine if Mark should sell his shares today and why.

b. Mark should not sell his shares because he would not have as much profit as he'd like.

Which of the following describes how to calculate the total investment in a load fund?

b. Multiply the number of shares by the offer price.

A mutual fund's net asset value increases by $5 per share. An investor who owns 450 shares of this fund sells them all for a profit of $2,205. What can you conclude about the fund?

b. The fund had a $0.10 per share commission when purchased.

Why is too much diversification considered a negative thing when dealing in a mutual funds?

b. When there is too much diversification in a mutual fund, great success in a single stock doesn't make much of a difference in the overall progress of the fund.

Rochelle invests in 500 shares of stock in the fund shown below. Name of Fund NAV Offer Price HAT Mid-Cap $18.94 $19.14 Rochelle plans to sell all of her shares when she can profit $6,250. What must the net asset value be in order for Rochelle to sell?

c. $31.64

A mutual fund has total assets of 2.4 million dollars and 300,000 shares. What is the net asset value of one share of the fund?

c. $8.00

An investor buys 400 shares of stock in a fund when the net asset value is $19.62 and the offer price is $19.84. The investor sells these shares when the net asset value is $43.19 and the offer price is $43.56. Determine the amount of profit the investor earns.

d. $9,340

Elly buys 75 shares of stock in a mutual fund for a total investment of $450. She sells 50 shares of her stock for total proceeds of $400. Determine if Elly made a profit or loss, and how much per share.

d. profit of $2 per share