Ch. 17 Quiz PFM

A. a group of​ open-end mutual funds under separate management but also under the parent umbrella of the same large financial firm.

A fund family​ is: A. a group of​ open-end mutual funds under separate management but also under the parent umbrella of the same large financial firm. B. a group of​ open-end mutual funds under separate management but also under the parent umbrella of a different financial firm. C. a group of​ closed-end mutual funds under separate management but also under the parent umbrella of the same large financial firm. D. a group of​ open-end mutual funds under the management of the parent financial firm.

C. allows investors to diversify among various mutual funds and receive a summary statement for these funds on a consolidated basis.

A mutual fund​ supermarket: A. has emerged from the Internet. B. is similar to the stock market. C. allows investors to diversify among various mutual funds and receive a summary statement for these funds on a consolidated basis. D. is the result of deregulation.

C. diversify across stock funds and bond funds.

An effective diversification strategy is​ to: A. hold mutual funds in the same country. B. diversify across government funds and bond funds. C. diversify across stock funds and bond funds. D. diversify across stock funds and utility funds.

C. in financial papers and at financial websites.

An investor can find price quotations for​ closed-end and​ open-end funds: A. in magazines and at financial websites. B. at insurance companies and at banks. C. in financial papers and at financial websites. D. at banks and in financial papers.

D. sells shares directly to investors and purchases those shares back whenever investors wish to sell their shares.

An​ open-end mutual​ fund: A. is open to all investors. B. has funds in a family or group of separately managed funds. C. allows investors to buy and sell shares within the fund but the time is limited. D. sells shares directly to investors and purchases those shares back whenever investors wish to sell their shares.

C. determine her investment​ objectives, evaluate her risk​ tolerance, and decide on the characteristics of a fund that are important.

Before an investor makes a decision about purchasing a mutual​ fund, she​ should: A. determine her investment​ objectives, evaluate her risk​ tolerance, then consult a broker. B. decide on the characteristics of a fund that are important and consult a broker. C. determine her investment​ objectives, evaluate her risk​ tolerance, and decide on the characteristics of a fund that are important. D. consult a broker.

1. B. higher 2. C. transaction

Expenses associated with international and global bond funds tend to be 1. A. lower B. higher than those of domestic bond funds because of the 2. A. accounting B. legal C. transaction costs involved.

C. the company name is listed in bold and the funds are listed below.

For​ open-end funds, if a company offers several different​ funds, A. the funds are organized by the volume of dollars invested in the fund. B. the mutual fund name is listed in bold and the companies are listed below. C. the company name is listed in bold and the funds are listed below. D. the funds are organized by the date they were opened.

D. All of the above.

Investing in mutual funds is a good choice​ because: A. mutual funds are designed to meet specific investment goals. B. a small amount of money is needed to obtain a broadly diversified portfolio. C. portfolio managers have expertise in investing and have access to the best research available. D. All of the above.

D. they believe that the load fund will generate higher returns and outperform a​ no-load fund even after the load fee.

Investors purchase load funds​ because: A. they​ don't understand these types of funds. B. load funds always outperform​ no-load funds when considering the fees paid on load funds. C. they may be the only type of fund available. D. they believe that the load fund will generate higher returns and outperform a​ no-load fund even after the load fee.

B. also known as​ high-yield bond​ funds, focus on risky bonds issued by firms with higher default risk. These bonds offer higher yields to entice investors to buy them.

Junk bond​ funds: A. also known as​ high-yield bond​ funds, focus on less risky bonds issued by firms with lower default risk. These bonds offer higher yields to entice investors to buy them. B. also known as​ high-yield bond​ funds, focus on risky bonds issued by firms with higher default risk. These bonds offer higher yields to entice investors to buy them. C. also known as​ high-yield bond​ funds, focus on risky bonds issued by firms with higher default risk. These bonds offer higher yields to entice investors to sell them. D. also known as default bond​ funds, focus on risky bonds issued by firms with higher default risk. These bonds offer higher yields to entice investors to buy them.

1. A. diversification 2. B. low 3. A. low 4. C. liquid 5. B. in the near future 6. B. very small

Mutual funds can provide instant 1. A. diversification B. returns C. benefits and access to financial expertise.​ However, you need to focus on funds that have 2. A. high B. low turnovers and 3. A. low B. high expenses. Be sure to keep you emergency reserve in a 4. A. stock B. bank C. liquid account and only invest monies in stock and bond funds that you do not anticipate needing 5. A. until retirement B. in the near future C. for the next month . Mutual funds also allow you to invest 6. A. very large B. very small amounts of money at a time which is beneficial for investors with limited funds

C. redemptions may exceed the value of the new shares purchased and fund managers may need to find the necessary funds to cover the redemptions through sale of stocks in the portfolio.

On a given​ day, A. the value of the new shares purchased must equal redemptions. B. redemptions may not exceed the value of the new shares purchased. C. redemptions may exceed the value of the new shares purchased and fund managers may need to find the necessary funds to cover the redemptions through sale of stocks in the portfolio. D. None of the above.

D. offer a higher yield than U.S. bonds

Some U.S. investors are attracted to international or global bond funds because​ they: A. are currency denominated. B. have lower exchange rate risk. C. have lower fees. D. offer a higher yield than U.S. bonds.

B. no-load funds outperform load funds when considering the fees paid on load funds on average.

Studies on mutual funds have found​ that: A. load funds always outperform​ no-load funds when considering the fees paid on load funds. B. no-load funds outperform load funds when considering the fees paid on load funds on average. C. no-load funds always outperform load funds when considering the fees paid on load funds. D. load funds outperform​ no-load funds when considering the fees paid on load funds on average.

C. the fee charged when you purchase them.

The difference between​ no-load and load mutual funds​ is: A. the fee charged when you sell them. B. the proportion of the purchase or sale paid to the government for the transaction. C. the fee charged when you purchase them.

D. All of the above.

The relevant​ characteristic(s) of a mutual fund that should be considered before purchasing​ is: A. the investment objective of the fund. B. the minimum investment. C. the investment company. D. All of the above.

D. investment companies.

The types of companies that usually manage​ open-end funds​ are: A. banks. B. government agencies. C. insurance companies. D. investment companies.

A. exchange rate

Those investing in U.S. bond funds do not face the A. exchange rate B. transaction cost C. asset devaluation D. broker trading risk as those investing in international or global bond funds.

C. Each fund has different objectives so a particular fund might appeal to different investor needs. Fund families make it easy to diversify a portfolio and shift assets among funds as needed.

What are the benefits of using a fund​ family? A. Each fund has different objectives so a particular fund might appeal to a limited number of investors. Fund families make it easy to diversify a portfolio and shift assets among funds as needed. B. Each fund has different objectives so a particular fund might appeal to different investor needs. Fund families make it harder to diversify a portfolio and shift assets among funds as needed. C. Each fund has different objectives so a particular fund might appeal to different investor needs. Fund families make it easy to diversify a portfolio and shift assets among funds as needed. D. Each fund has the same objective so a particular fund might appeal to different investor needs. Fund families make it easy to diversify a portfolio and shift assets among funds as needed.

A. Some investors are willing to assume a higher risk in order to generate higher overall returns.

What type of investor might be attracted to junk bond​ funds? A. Some investors are willing to assume a higher risk in order to generate higher overall returns. B. Some investors are willing to assume a lower risk in order to generate lower overall returns. C. Some investors are willing to assume a higher risk in order to generate lower overall returns. D. Some investors are willing to assume a lower risk in order to generate higher overall returns.

D. listed on the exchanges where they are traded.

​Closed-end funds​ are: A. listed in bold and the companies are listed below. B. not listed. C. listed according to the NAV. D. listed on the exchanges where they are traded.

C. lowers the level of risk in a portfolio.

​Diversification: A. benefits are significant because most funds move in the same direction as the market. B. benefits are important because most funds do not necessarily move in the same direction as the market. C. lowers the level of risk in a portfolio. D. raises the level of risk in a portfolio.