PFP CH 14
The securities found in a balanced fund would primarily consist of: (Select the best answer below.) A. an allocation that moves money from stocks to bonds to maximize return B. foreign stocks C. a heavy weighing in a single industry comma for example a portfolio consisting of 65 % technology stocks D. federal agency securities
A
The securities found in a life cycle fund would primarily consist of: (Select the best answer below.) A. stocks and bonds that are selected based on investor characteristics B. foreign stocks C. an allocation that moves money from stocks to bonds to maximize return D. a heavy weighing in a single industry comma for example a portfolio consisting of 65 % technology stocks
A
The securities found in a sector fund would primarily consist of: (Select the best answer below.) A. a heavy weighing in a single industry comma for example a portfolio consisting of 65 % technology stocks. B. stocks and bonds that are selected based on investor characteristics C. a market basket that represents the S&P 500 D. D. a mix of stocks comma bonds and money market securities
A
The securities found in an asset allocation fund would primarily consist of: (Select the best answer below.) A. a mix of stocks comma bonds and money market securities B. companies with strong earnings and some dividends C. dividend paying blue chip stocks D. high growth and high Upper P/E companies
A
The securities found in an index fund would consist of: (Select the best answer below.) A. a market basket that represents the S&P 500 B. companies with strong earnings and some dividends C. dividend paying blue chip stocks D. foreign stocks
A
The securities found in an international fund would primarily consist of: (Select the best answer below.) A.foreign stocks B.an allocation that moves money from stocks to bonds to maximize return C. stocks and bonds that are selected based on investor characteristics D. a market basket that represents the S&P 500
A
The securities found in a growth fund would primarily consist of : (Select the best answer below.) A. stocks and bonds that are selected based on investor characteristics.stocks and bonds that are selected based on investor characteristics. B. companies with strong earnings and some dividends.companies with strong earnings and some dividends. C. a heavy weighing in a single industry comma for example a portfolio consisting of 65 % technology stocks.a heavy weighing in a single industry, for example a portfolio consisting of 65% technology stocks. D. federal agency securities.
B
The securities found in an aggressive growth fund would primarily consist of: (Select the best answer below.) A. federal agency securities B. high growth and high Upper P/E companies C. a mix of stocks comma bonds and money market securities D. dividend paying blue chip stocks.
B
The securities found in a U.S. Government Bond Fund would primarily consist of: (Select the best answer below.) A. dividend paying blue chip stocks B. foreign stocks C. federal agency securities D. a market basket that represents the S&P 500
C
The securities found in a growth and income fund would primarily consist of: (Select the best answer below.) A. foreign stocks B. federal agency securities C. dividend paying blue chip stocks D. a heavy weighing in a single industry comma for example a portfolio consisting of 65 % technology stocks
C
Which type of risk can an investor effectively manage by investing in broadly diversified mutual funds? A. Serial risk B. Systematic risk C. Unsystematic risk D. None of the above is correct.
C
Principle 8 tells us that diversification reduces A. profitability. B. earnings. C. costs. D. risk. E. none of the above.
D
The securities found in a small company fund would primarily consist of: (Select the best answer below.) A. federal agency securities B. a market basket that represents the S&P 500 C. stocks and bonds that are selected based on investor characteristics D. stocks that probably trade in the OTC market
D
Which of the following statements is true regarding mutual fund load charges? A. Back−end load funds perform better than no−load funds. B. Load funds perform better than no−load funds. C. Load funds perform more poorly than back−end load funds. D. No−load funds perform just as well as load funds. E. None of the above
D
By law, all mutual funds must be broadly diversified.
F
Mutual funds eliminate the systematic risk through diversification.
F
When you own shares in a mutual fund, you directly own shares of the companies that make up the fund.
F
A closed−end fund trades more like common stock than a mutual fund.
T
All distributions from a mutual fund, whether paid out or reinvested, are taxable in the year in which they occur.
T
Exchange traded funds are mutual funds that trade on an exchange just like individual securities and can be bought or sold throughout the trading day.
T
Most small investors don't have the time, expertise, or desire to do the research necessary to invest in individual stocks therefore mutual funds are a good solution.
T
Mutual funds provide an inexpensive way for investors to diversify and gain access to professional management.
T
Net asset value is determined by taking the total market value of all the securities held by the mutual fund, subtracting out any liabilities, and dividing the result by the number of shares outstanding.
T
The most common and popular form of mutual fund is an openminus−end mutual fund
T
