Personal Finance Chapter 17
Estimating Returns. Hunter invested $7,800 in shares of a load mutual fund. The load of the fund is 6%. When Hunter purchased the shares, the NAV per share was $68. A year later, Hunter sold the shares at a NAV of $67 per share. What is Hunter's return from selling his shares in the mutual fund? Hunter's return from selling his shares in the mutual fund is enter your response here ______%. (Round to two decimal places and include a negative sign where appropriate.)
-7.39% 7800*6% = 468 7800-468 = 7332 7332/67=7223.94 7332.94-7800=(576.06) (576.06)/7800=-.07385 .07385*100=(7.39)
The NAV is commonly reported as: (Select the best answer below.) A. Number of Shares Outstanding/NAV. B. NAV/Number of Shares Outstanding. C. the total dollar market value. D. Market Value of All Shares/Number of Shares Outstanding.
B. NAV/Number of Shares Outstanding. NAV divided by Number of Shares Outstanding
The securities that a mutual fund invests in are selected by: (Select the best answer below.) A. the individual investors. B. a portfolio manager. C. a portfolio manager and the individual investors. D. a portfolio manager, the individual investors, and a mutual fund manager.
B. a portfolio manager.
NAV. What is a mutual fund's net asset value (NAV)? How is the NAV calculated and reported? A mutual fund's net asset value is the: (Select the best answer below.) A. market value of all the securities it has purchased minus dividend distributions to the fund's shareholders. B. number of shares of each security the fund holds times the current share price of the security. C. market value of all the securities it has purchased minus any liabilities owed. D. market value of all the securities it has purchased minus the market value of all the securities it has sold.
C. market value of all the securities it has purchased minus any liabilities owed.
Categories of Mutual Funds. What are mutual funds? What two broad categories of mutual funds exist, and how are they different? Do investors select the securities the mutual fund invests in? Mutual funds: (Select the best answer below.) A. are funds that the broker and investor mutually decide to invest in. B. use money from select investors to invest in funds that the broker and investor mutually decide to invest in. C. use money from many investors to invest in portfolios of securities. D. are funds that are invested in commercial and public enterprises.
C. use money from many investors to invest in portfolios of securities.
The two broad categories of mutual funds are: (Select the best answer below.) A. stock and utility funds. B. finance and stock funds. C. utility and bond funds. D. stock and bond funds.
D. stock and bond funds.
Types of Stock Mutual Funds. List and briefly describe the different types of stock mutual funds. Match the different types of stock mutual funds with the appropriate description. (Select from the drop-down menus.) Growth Funds Capital appreciation funds Small capitalization funds Mid-size capitalization funds Equity income funds Balanced growth funds Sector funds Technology funds Index funds International stock funds Global mutual funds
Growth Funds - 9. focus on stocks that have potential for above-average growth Capital appreciation funds - focus on stocks that are expected to grow at a very high rate and pay low or no dividends. Small capitalization funds - focus on firms that are relatively small and have more potential for growth. Mid-size capitalization funds - focus on medium-size firms that are more established and have less growth potential than small-cap firms. Equity income funds - focus on firms that pay a high level of dividends but do not exhibit strong growth. Balanced growth funds - contain both growth stocks and stocks that pay high dividends. Sector funds - focus on a specific industry or sector, such as technology stocks. Technology funds - focus on stocks of technology-based firms and are a particular type of sector fund. Index funds - attempt to mirror the movements of an existing stock index. International stock funds - focus on a specific country or on a particular geographic region. Global mutual funds - focus on stocks of both foreign and U.S. firms.
Types of Bond Mutual Funds. List and briefly describe the types of bond mutual funds. Match the descriptions to the types of bond mutual funds. Treasury bond funds Ginnie Mae funds Corporate bond funds High-yield (junk) bond funds Municipal bond funds Index bond funds International bond funds Global bond funds
Treasury bond funds - focus on investments in Treasury bonds Ginnie Mae funds - invest in bonds issued by the Government National Mortgage Association. Corporate bond funds- focus on bonds issued by high-quality firms High-yield (junk) bond funds - focus on relatively risky bonds issued by firms that are subject to default risk. Municipal bond funds - invest in municipal bonds. Index bond funds - are intended to mimic the performance of a specified bond index. International bond funds - focus on bonds issued by non-U.S. firms or governments. Global bond funds - invest in both U.S. and foreign bonds.
