Question 1

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Value funds look for stocks with relatively [high | low] dividend yields.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 2

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Index funds,while trying to match market performance,consistently [perform well | perform poorly] against market benchmarks.

Accepted Answer

Index funds are designed to track the performance of a specific market benchmark, such as the S&P 500. Therefore, they are expected to perform similarly to the benchmark. Studies have shown that over the long term, index funds tend to outperform actively managed funds, which try to beat the benchmark but often fail to do so.

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-You [could | could not] switch your investments from your Fidelity income fund to another Fidelity fund by making a phone call.

Accepted Answer

The word "could" correctly completes the sentence, indicating that it is possible to switch investments with a phone call. If the word "could not" were used, it would indicate that switching investments requires a different method.

Question 4

RACE Mutual fund is a no-load fund that had a net asset value one year ago of $25.60.Today the NAV is $28.83.During the year dividends of $0.72 were paid out and a capital gains distribution of $0.65 was made.Calculate the approximate yield for RACE.

Accepted Answer

The answer of RACE Mutual fund is a no-load fund...

Question 5

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Advantages of exchange traded funds over mutual funds include [lower | higher] expense ratio.

Accepted Answer

ETFs typically have lower expense ratios than mutual funds because they operate with lower overhead costs and are more passive in their investment strategies.

Question 6

The KLM Mutual Fund has a net asset value of $12.34 and an offer price of $13.34.Use this information to answer the following questions.

Accepted Answer

investment/offer price: $1,000/$13.34 = 74.9625 shares b. # of shares F1F1F1S1F1F1F10 NAV: 74.9625 F1F1F1S1F1F1F10 $12.34 = $925.04 asset value c. $1,000 - 925.04 = $74.96 load charge OR $13.34 - $12.34 = 1.00 per share

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Exchange traded funds are investment company shares that trade [at day's close | throughout the day] on stock exchanges.

Accepted Answer

Exchange traded funds (ETFs) trade throughout the day on stock exchanges, distinguishing them from mutual funds which are typically priced at the end of the trading day.

Question 8

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Advantages of exchange traded funds over mutual funds include [narrow | broad] industry selection.

Accepted Answer

Exchange traded funds typically offer a narrow industry selection, meaning that investors can choose a specific sector or industry to invest in. Mutual funds tend to offer a broader selection of industries within their portfolio.

Question 9

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The primary reason for investing in mutual funds is [professional management | diversification].

Accepted Answer

The primary reason for investing in mutual funds is diversification. Mutual funds allow investors to invest in a diversified portfolio of stocks or bonds, which reduces the risk of losing all their money on a single investment. Professional management is also a benefit of mutual funds, but it is not the primary reason for investing in them.

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-You could drop an automatic investment plan [at any time | only by fulfilling the original agreement].

Accepted Answer

The phrase "at any time" correctly completes the statement, as it indicates that the automatic investment plan can be dropped at any point, without any specific conditions needing to be met. "Only by fulfilling the original agreement" suggests that there are certain requirements that must be met in order to drop the plan, which is not necessarily the case.

Question 11

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Value funds look for stocks with relatively [high | low] P/E ratios.

Accepted Answer

Value funds typically look for stocks with relatively low P/E ratios, as these stocks are considered undervalued compared to their earnings.

Question 12

Creviston Mutual Fund,a load fund,holds securities valued at $90,000,000 on August 30.The fund had liabilities of $2,000,000 and 4,800,000 shares outstanding.Calculate the net asset value per share on this day.

Accepted Answer

The answer of Creviston Mutual Fund,a load fund,holds securities valued...

Question 13

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-A [global | international] fund invest exclusively in foreign securities.

Accepted Answer

The word "global" describes something that pertains to the entire world, whereas "international" refers to relationships between countries. Since the statement is referring to foreign securities, the more fitting term is "international" which denotes investing in securities of various countries.

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-If you choose to have your mutual fund dividends automatically reinvested,you [may defer taxes on the dividends until you redeem some shares | still owe taxes for the year the dividends were earned].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Quiz 13: Investing in Mutual Funds

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Value funds look for stocks with relatively [high | low] dividend yields.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Index funds,while trying to match market performance,consistently [perform well | perform poorly] against market benchmarks.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -You [could | could not] switch your investments from your Fidelity income fund to another Fidelity fund by making a phone call.

RACE Mutual fund is a no-load fund that had a net asset value one year ago of $25.60.Today the NAV is $28.83.During the year dividends of $0.72 were paid out and a capital gains distribution of $0.65 was made.Calculate the approximate yield for RACE.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Advantages of exchange traded funds over mutual funds include [lower | higher] expense ratio.

The KLM Mutual Fund has a net asset value of $12.34 and an offer price of $13.34.Use this information to answer the following questions.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Exchange traded funds are investment company shares that trade [at day's close | throughout the day] on stock exchanges.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Advantages of exchange traded funds over mutual funds include [narrow | broad] industry selection.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The primary reason for investing in mutual funds is [professional management | diversification].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -You could drop an automatic investment plan [at any time | only by fulfilling the original agreement].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Value funds look for stocks with relatively [high | low] P/E ratios.

Creviston Mutual Fund,a load fund,holds securities valued at $90,000,000 on August 30.The fund had liabilities of $2,000,000 and 4,800,000 shares outstanding.Calculate the net asset value per share on this day.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -A [global | international] fund invest exclusively in foreign securities.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -If you choose to have your mutual fund dividends automatically reinvested,you [may defer taxes on the dividends until you redeem some shares | still owe taxes for the year the dividends were earned].