Packaged Products Overview Review Questions

An open end fund has a Net Asset Value of $10 per share. The minimum price at which a share can be purchased is: A: $10 B: $10 plus a commission C: $10 plus a mark-up D: any price because this is negotiated in the market

A: $10 -purchaser pays the next computed Net Asset Value plus a sales charge if the fund imposes a "sales load." For a "no load" fund, the customer would simply pay Net Asset Value - this is the minimum price for an open-end fund

Which of the following terms apply to publicly traded fund shares? A: Negotiable with a one-time stock issuance B: Redeemable with a one-time stock issuance C: Negotiable with a continuous stock issuance D: Redeemable with a continuous stock issuance

A: Negotiable with a one-time stock issuance

The minimum price at which an open end fund share can be purchased is: A: Net Asset Value B: Net Asset Value plus a commission C: Market Price D: Market Price plus a commission

A: Net Asset Value

Which of the following MUST be a closed end fund? A: Net Asset Value= $10 / Purchase Price = $9.50 B: Net Asset Value = $10 / Purchase Price = $10 C: Net Asset Value = $10 / Purchase Price = $10.50 D: The fund is issued and redeemed at end-of-day

A: Net Asset Value= $10 / Purchase Price = $9.50

The principal difference between an open end management company and a closed end management company is: A: capitalization B: management C: investment objective D: expense ratio

A: capitalization

The term "mutual fund" is the common name for a(n): A: open end management company B: closed end management company C: fixed unit investment trust D: participating unit investment trust

A: open end management company

Which of the following is a redeemable security? A: Corporate debenture B: Closed-end fund C: Open-end fund D: Ginnie-Mae pass through certificates

C: Open-end fund

Assets - Liabilities for a mutual fund equals: A: Net Worth B: Net Asset Value C: Net Operating Margin D: Net Investment Income

B: Net Asset Value

Which statement is TRUE when comparing types of management companies? A: Open-end funds are publicly traded funds B: Open-end funds are mutual funds C: Closed-end funds have no management D:Closed-end funds are not publicly traded funds since these are closed to the general public

B: Open-end funds are mutual funds -open-end management company is a mutual fund. Mutual funds (open-end funds) are "open" to new investment. Shares are issued and redeemed at the end of the day and do not "trade."

A closed-end management company is a: A: mutual fund B: publicly traded fund C: fixed unit investment trust D: participating unit investment trust

B: publicly traded fund

All of the following are defined as "investment companies" under the Investment Company Act of 1940 EXCEPT: A: Face Amount Certificate Company B: Unit Investment Trust C: Oil and Gas Leasehold Partnership D: Management Company

C: Oil and Gas Leasehold Partnership

Which of the following can be purchased on margin? A: Mutual Funds B: Initial public offerings of Closed End Funds C: Closed End Funds trading on the NYSE D: New issues of stock

C: Closed End Funds trading on the NYSE

All of the following investment company securities are redeemable EXCEPT: A: Open end fund shares B: Fixed unit investment trusts C: Closed end fund shares D: Participating unit investment trusts

C: Closed end fund shares -listed and traded on exchange

Which terms apply to fixed unit investment trusts? A: Managed and regulated B: Managed and unregulated C: Unmanaged and regulated D: Unmanaged and unregulated

C: Unmanaged and regulated -portfolio is fixed, not managed -regulated under investment company act of 1940

The essential difference between an open end fund and closed end fund is that a(n): A: open-end fund is managed; while a closed-end fund is not managed B: closed-end fund is managed; while an open-end fund is not managed C: open-end fund has a different capital structure than a closed-end fund D: open-end fund computes Net Asset Value daily; while a closed-end fund does not

C: open-end fund has a different capital structure than a closed-end fund

All of the following terms apply to publicly traded fund shares EXCEPT: A: one-time issuance B: managed C: redeemable D: negotiable

C: redeemable

The minimum price at which a closed end fund share can be purchased is: A: Net Asset Value B: Net Asset Value plus a commission C: Market Price D: Market Price plus a commission

D: Market Price plus a commission

Which terms apply to mutual fund shares? A: Negotiable with a one-time stock issuance B: Negotiable with continuous stock issuance C: Redeemable with a one-time stock issuance D: Redeemable with continuous stock issuance

D: Redeemable with continuous stock issuance

A variable annuity is a: A: face amount certificate company B: management company C: fixed unit investment trust D: participating unit investment trust

D: participating unit investment trust