HDFS 3350 MASTER 10
The investments in the Alamo Basics Contingency Fund have a current market value of $800 million. The fund also has liabilities that total $60 million. If this mutual fund has 20 million shares, what is the net asset value per share?
37
Nicholas purchased 150 shares of ABC Mutual Fund at $10.50 and sold them one year later at a price of $14.50. His total capital gain was
600
The average upfront charge for a no-load mutual funds is
A- 0 percent
What percentage of all mutual funds are closed-end funds?
A- 7 percent
Which class of shares charges a commission when shares are purchased?
A- A
An example of a lifecycle fund is a fund that
A- Assists investors with planning for retirement by a specific date
Payments to investors related to the sale of securities in the fund's portfolio are
A- Capitol gain distributions
Which type of fund has the prices determined by factors of supply and demand like a stock?
A- Closed-end funds
Professional advisory services provide detailed information on mutual funds. Which of the following is NOT a professional advisory service?
A- Dun and Moody's
Which of the following types of stock funds invests in stock issued by companies with a long history of paying dividends?
A- Equity income funds
Many mutual funds charge a commission when they are purchased by investors. These are called:
A- Load funds
How is an ETF similar to a closed-end fund?
All of these are correct
Thomas wants to invest in a fund that invests in stock, bonds, and money market instruments. Which of the following will meet his needs?
Asset allocation funds
An example of a lifecycle fund is a fund that
Assists investors with planning for retirement by a specific date.
A fee charged to defray the costs of advertising and marketing for a mutual fund is called a _________ fee
B- 12b-1
Which class of shares charges a commission when withdrawals are made during the first five years?
B- B
Val wants to invest in a fund whose primary objective is to conserve principal, provide income, and provide long-term growth. Which of the following will best meet her needs?
B- Balanced funds
If you hold mutual fund shares in your Roth IRA, the taxes will be
B- Eliminated
Which of the following is a fund that invests in stocks or securities contained in an index?
B- Exchange-traded funds
Which of the following types of stock funds invests in stock issued by companies expecting higher than average revenue and earnings growth?
B- Growth funds
Cash paid to shareholders that is NOT related to the sale of securities in the fund's portfolio is called
B- Income dividend
Which of the following is unique for a closed-end fund?
B- Its value is determined by supply and demand
The average load charge for a mutual fund is
C- 3-5 percent
A problem with mutual fund is
C- Being required to report reinvestment income dividends and capitol gain distributions on your federal tax return
Which class of shares does not charge a sales load or contingent deferred sales fee and charges a higher 12b-1 fee than the other classes?
C- C
When you sell your shares in a mutual fund, you may receive a profit called
C- Capitol Gain
Which of the following stock funds invests in the same companies included in the S&P 500?
C- Index funds
Which of the following is true about mutual funds and taxes?
C- Investment companies are required to send each share holder a year-end statement that specifies how much each received in dividends and capitol gain distribution
All of the following are advantages of a mutual fund EXCEPT
C- Loads of up to 8.5 percent
Sally wants to invest in a mutual fund. The mutual fund must provide a(n)_____ to her.
C- Prospectus
Which of the following is NOT a way one can access reliable information about mutual funds on the internet?
C- Review blogs from amateur investors about their favorite mutual funds
Time is an important factor when evaluating a mutual fund for which of the following?
C- the tenure of a fund manager
Which of the following contains a letter from the president of the investment company, detailed financial information, a schedule of investments, and a letter from the fund's independent auditors?
C-Mutual fund annual report
The net asset value is calculated as
D- (current market value of portfolio - liabilities)/number of shares outstanding
A load fund is allowed to collect a sales fee as high as
D- 8.5 percent
How do mutual funds provide returns to their shareholders?
D- All of the above
Sally wants to invest in a fund that only invests in stock. Which of the following will meet her needs?
D- Midcap funds
Which of the following provides a means of monitoring the value of your mutual fund investments, but not as much information as the other options listed to conduct a more complete evaluation?
D- Newspapers
Which of the following stock funds invests in stock issued by companies throughout the world outside of the US?
D- international funds
Which of the following is NOT correct about the 12b-1 fee?
D- it needs to be disclosed in the annual report but not in the prospectus
Which of the following is NOT correct?
E- A managed fund will outperform an index fund only 60 percent of the time.
How is an ETF similar to a closed-end fund?
E- All of the above
Professional advisory services provide research on mutual funds in all of the following areas EXCEPT
E- All of the above are included by professional advisory services
All of the following are valid ways to purchase mutual funds except
E- All of the ways listed are valid
A no-load mutual fund
E- Can charge a 12b-1 fee of up to .25 percent of its assets
Whose shares are issued and redeemed by the investment company at the request of investors?
E- Open-end funds
Which of the following provides some information about mutual funds for free and more detailed information at a cost?
E- Professional advisory services
Which of the following stock funds invests in stock traded within one area of the world?
E- Regional funds
Melinda wants to withdraw some money from her mutual fund. Which of the following is NOT an option available?
E- Withdraw all principal and leave interest dividends and capitol gain distributions in the account
A contingent deferred sales load is known as all of the following EXCEPT
E- all of the above
A capitol gain distribution is the profit that usually results when investors sell shares that have increase in value
FALSE
A family of funds is a grouping of funds that all invest in bonds or all in stocks
FALSE
A newspaper will provide more complete coverage of mutual funds compared to other sources
FALSE
A socially responsible fund invests in companies that produce tobacco, nuclear energy, and weapons in order to influence the board to change the companies' mission statements.
FALSE
An "A-fund" mutual fund may have a commission as high as 9.5 percent
FALSE
An aggressive growth fund invests in companies with a long history of paying dividends
FALSE
An exchange-traded fund has portfolio managers who actively research and select stocks and other securities
FALSE
An investment company sponsoring a mutual fund must give potential investors an annual report
FALSE
Cynthia received an IRS Form 1099DIV. This form is sent at the end of each quarter to specify how much she received in dividends and capitol gain distributions
FALSE
For Individuals , stocks and bonds are safer choices than mutual funds because money is pooled from many investors for mutual funds.
FALSE
In 2008, investors in the US could choose from more than 25,000 mutual funds
FALSE
Most managed mutual funds outperform the Standard & Poor's 500 stock index
FALSE
Most mutual funds are closed-end funds
FALSE
Mutual funds provide amateur management
FALSE
Open-end mutual funds have managers and closed-end funds do not
FALSE
Stephanie wants to invest in a mutual fund that invests in companies within the same industry. She should put her money into a regional fund.
FALSE
The only way to get reliable information about mutual funds is to pay a fee for it.
FALSE
The return for an intermediate US government bond fund should be higher than for a junk bond fund
FALSE
Fred wants to invest in a "no-load" fun. This means that the fund has no 12b-1 fees.
FLASE
Which of the following is true about mutual funds and taxes?
Investment companies are required to send each shareholder a year-end statement that specifies how much each received in dividends and capital gain distributions.
Which of the following was not mentioned as a prerequisite to investing?
Pay off all your debt.
A 'good' fund manager has the ability to increase the share value when the economy is good and retain that value when the economy is bad
TRUE
A higer turnover ratio for a mutual fund can result in higher tax bills
TRUE
Brenda wants to invest in a fund that will outperform most others. On average, she would be better off to invest in an index fund instead of a managed closed-end fund
TRUE
If Ryan wants to invest in an S&P 500 index fund, he should not expect his fund to behave differently than the underlying index
TRUE
Many people invest in mutual funds through their retirement accounts
TRUE
Many people own mutual funds as part of a 401(k) plan
TRUE
Mutual funds may carry a risk that they will substantially decrease in value
TRUE
The difference between a global stock fund and an international fund is that the global stock fund invests in companies throughout the world, including the US and the international fund invests outside the US
TRUE
Which of the following is correct for a closed-end fund?
The price of its shares is determined by supply and demand, by the value of stocks in the portfolio, and by investor expectations.
When using the dollar cost averaging approach to investing, which of the following is false?
When the price per share is up, you purchase more shares.
Melinda wants to withdraw some money from her mutual fund. She has a minimum required asset value of $10,000. Which of the following is not an option available for her to systematically withdraw some money?
Withdraw all principal and leave interest dividends and capital gain distributions in the account
How do mutual funds provide returns to their shareholders?
all of these
If you start a new job and are offered the opportunity to participate in the company's 401(k) or 403(b) retirement plan, which of the following decisions can affect your financial future?
all of these decisions can affect your financial future
Thomas wants to invest in a fund that invests in stock, bonds, and money market instruments. Which of the following will meet his needs?
asset allocation funds
When you sell your shares in a mutual fund, you may receive a profit that results from an increase in value called
capital gain
Payments to a fund's shareholders that result from the sale of securities in the fund's portfolio are
capital gain distribution
Which type of fund has the prices determined by factors of supply and demand like the prices of a stock?
closed end fund
Which of the following are major reasons that investors purchase mutual funds
diversification and professional management
If you hold mutual fund shares in your Roth individual retirement account, the taxes on reinvested income will be
eliminated
Which of the following types of stock funds invests in stock issued by companies with a long history of paying dividends?
equity income funds
Which of the following types of stock funds invests in the same companies included in the Standard & Poor's 500 stock index?
index funds
Which of the following provides up-to-date information that can help investors made decisions quickly without having to make a trip to the library?
internet
Which one of the following was not one of the three rules for successful investing?
invest large amounts of money
Sally wants to invest in a fund that invests only in stock. Which of the following will meet her needs?
midcap fund
Which of the following contains a letter from the president of the investment company, detailed financial information, a schedule of investments, and a letter from the fund's independent auditors?
mutual fund annual report
Whose shares are issued and redeemed by the investment company at the request of investors?
open end fund
Which of the following types of stock funds invest in stock traded within one specific region of the world?
regional funds
