Question 1

Investing in a mutual fund rather than an individual stock reduces

Accepted Answer

The answer of Investing in a mutual fund rather than...

Question 2

There are approximately ____ mutual fund families in the United States.

Accepted Answer

There are approximately 400 mutual fund families in the United States, which collectively offer a wide range of investment options across various asset classes.

Question 3

Open-end mutual fund shares have good liquidity because​

Accepted Answer

Open-end mutual fund shares have good liquidity because the fund company will buy back the shares whenever requested. This means that investors can easily sell their shares and receive their money back. However, there may be redemption fees or other costs associated with selling the shares. While investors can also find other buyers for their shares, the ease and reliability of the fund company buying back the shares makes it the best choice for good liquidity. Option A is incorrect because open-end mutual fund shares do not act like a bank account. Option C is incorrect because there may be redemption fees associated with selling the shares. Option D is incorrect because there is no guarantee that another investor will be willing to purchase the shares at a fair price.

Question 4

Mutual fund investors expect to profit from their investments through the receipt of mutual fund dividends and

Accepted Answer

Mutual fund investors can profit from dividends and capital gains when the value of the fund's shares increases and they sell them back to the fund. Interest and rent income are not typical sources of profit for mutual fund investors.

Question 5

Automatic dividend reinvestment

Accepted Answer

Automatic dividend reinvestment compounds share ownership, meaning that the dividends earned are used to purchase additional shares, increasing the overall ownership in the investment. This can result in higher returns over time. It is not a requirement for all mutual fund companies, however. It does not defer taxes on income and may not reduce investment yields.

Question 6

Which of the following allows you to easily move funds from one mutual fund to another managed by the same investment company?

Accepted Answer

Exchange privilege allows you to move funds from one mutual fund to another managed by the same investment company without having to sell and repurchase shares, which may be subject to fees and taxes. Automatic reinvestment involves using dividends and capital gains from a mutual fund to purchase additional shares of the same fund. Rotation is a strategy of periodically switching investments between different asset classes. Stock swap is a transaction in which an investor exchanges one stock for another. None of these options specifically allow for easy movement between mutual funds managed by the same investment company.

Question 7

Compounding is attained in mutual fund investing through​

Accepted Answer

Compounding is achieved through the automatic reinvestment of dividends in a mutual fund, which means that the earnings are reinvested, generating additional earnings on the reinvested earnings. Frequent buying and selling of shares, minimizing account fees, and using leverage do not necessarily contribute to compounding.

Question 8

Mutual fund investors must pay federal income taxes on

Accepted Answer

Mutual fund investors must pay federal income taxes on all three options: ordinary income dividend distributions, capital gains distributions, and capital gains from selling their shares.

Question 9

Sylvia owns 100 shares of Maxima Growth mutual fund.In December she received a check for $50,payment of ordinary income dividend distributions and capital gains distributions.Sylvia also noticed in her daily newspaper listings that Maxima Growth is now worth $2 per share more than what she purchased it for at the beginning of the year.How much will Sylvia's holdings in Maxima Growth add to her taxable income for the year assuming she decides not to sell the fund this year?

Accepted Answer

The $50 received from ordinary income dividend distributions and capital gains distributions is taxable income. The increase in share value ($2 per share increase on 100 shares = $200) is not taxable until the shares are sold.

Question 10

Compute the net asset value for a share of a mutual fund with the following characteristics:
​
Market value of assets:
$177,000,000
Market value of liabilities:
$12,000,000
Number of shares outstanding:
7,250,000

Accepted Answer

To find the net asset value per share, we need to subtract the market value of liabilities from the market value of assets and then divide the result by the number of shares outstanding.

Net asset value = (Market value of assets - Market value of liabilities) / Number of shares outstanding

Plugging in the values, we get:

Net asset value = ($177,000,000 - $12,000,000) / 7,250,000 
Net asset value = $165,000,000 / 7,250,000 
Net asset value = $22.76

Therefore, the correct answer is B.

Question 11

Compute the net asset value for a share of a mutual fund with the following characteristics:
​
Market value of assets:
$6,257,562,000
Market value of liabilities:
$123,800,000
Number of shares outstanding:
134,430,000

Accepted Answer

The answer of Compute the net asset value for a...

Question 12

Net asset value increases when

Accepted Answer

Net asset value (NAV) is calculated by dividing a mutual fund's total net assets by the number of shares outstanding. If the value of the underlying securities increases, the total net assets will increase, which will lead to an increase in NAV. The other choices may lead to an increase in the mutual fund's total net assets but will not directly impact NAV.

Question 13

A mutual fund's ______ can allow investors to have amounts as low $25 per month transferred from their bank account to purchase shares.

Accepted Answer

The automatic investment program, also known as AIP, allows investors to set up automatic monthly transfers from their bank account to purchase shares in a mutual fund. This can often be done with small amounts, such as $25 per month, making it an affordable and convenient way for investors to regularly invest in the mutual fund.

Question 14

Realized net capital gains that a mutual fund pays out to its investors are called ____ distributions.

Accepted Answer

Realized net capital gains that a mutual fund pays out to its investors are called capital gains distributions. Ordinary income dividends refer to payouts from a mutual fund's investment income such as dividends, interest, and rent. Interest refers to income earned on fixed income securities. Rent refers to income earned from property rentals.

Question 15

____ are received as current income while one owns shares in a mutual fund.

Accepted Answer

Mutual funds distribute two types of income to their investors: ordinary income dividends and capital gains distributions. Both of these are received as current income while one owns shares in the mutual fund. Therefore, choice A is correct while B, C, and D are not completely correct.

Question 16

A switching privileges on mutual funds allows shareholders to exchange shares of one mutual fund for shares of

Accepted Answer

Switching privileges on mutual funds typically allow shareholders to exchange shares of one mutual fund for shares of another mutual fund within the same family of funds. This is beneficial because it allows for diversification and potential investment growth within the same company or investment management firm.

Question 17

Which of the following is (are)a unique advantage(s)of investing in a family of funds?

Accepted Answer

Exchange privileges within a family of funds allow investors to switch between different funds under the same fund family, often without incurring additional charges, providing flexibility and convenience in managing investments.

Question 18

The Amalgamated Fund has assets with a market value of $25 million dollars,liabilities of $1 million dollars and 10 million shares outstanding.Its net asset value is

Accepted Answer

The net asset value (NAV) is calculated by subtracting the fund's liabilities from its assets and then dividing by the number of shares outstanding. So, NAV = ($25 million - $1 million) / 10 million shares = $24 million / 10 million shares = $2.40.

Question 19

Advantages of mutual funds include

Accepted Answer

Mutual funds provide diversification by investing in a pool of securities, thus reducing the overall risk. They are managed by professionals who have market expertise and knowledge, leading to better returns. Mutual funds are also highly liquid, allowing investors to easily buy or sell shares. Therefore, all of these options make mutual funds an attractive investment option.

Question 20

Federal income taxes on annual earnings from mutual funds can be avoided

Accepted Answer

Federal income taxes on annual earnings from mutual funds can be avoided by random risk. Random risk is the risk that an event will occur that is not predictable or foreseeable.

Quiz 15: Investing Through Mutual Funds

Investing in a mutual fund rather than an individual stock reduces

There are approximately ____ mutual fund families in the United States.

Open-end mutual fund shares have good liquidity because

Mutual fund investors expect to profit from their investments through the receipt of mutual fund dividends and

Automatic dividend reinvestment

Which of the following allows you to easily move funds from one mutual fund to another managed by the same investment company?

Compounding is attained in mutual fund investing through

Mutual fund investors must pay federal income taxes on

Compute the net asset value for a share of a mutual fund with the following characteristics: Market value of assets: $177,000,000 Market value of liabilities: $12,000,000 Number of shares outstanding: 7,250,000

Compute the net asset value for a share of a mutual fund with the following characteristics: Market value of assets: $6,257,562,000 Market value of liabilities: $123,800,000 Number of shares outstanding: 134,430,000

Net asset value increases when

A mutual fund's ______ can allow investors to have amounts as low $25 per month transferred from their bank account to purchase shares.

Realized net capital gains that a mutual fund pays out to its investors are called ____ distributions.

____ are received as current income while one owns shares in a mutual fund.

A switching privileges on mutual funds allows shareholders to exchange shares of one mutual fund for shares of

Which of the following is (are) a unique advantage(s) of investing in a family of funds?

The Amalgamated Fund has assets with a market value of $25 million dollars,liabilities of $1 million dollars and 10 million shares outstanding.Its net asset value is

Advantages of mutual funds include

Federal income taxes on annual earnings from mutual funds can be avoided

Quiz 15: Investing Through Mutual Funds

Investing in a mutual fund rather than an individual stock reduces

There are approximately ____ mutual fund families in the United States.

Open-end mutual fund shares have good liquidity because​

Mutual fund investors expect to profit from their investments through the receipt of mutual fund dividends and

Automatic dividend reinvestment

Which of the following allows you to easily move funds from one mutual fund to another managed by the same investment company?

Compounding is attained in mutual fund investing through​

Mutual fund investors must pay federal income taxes on

Compute the net asset value for a share of a mutual fund with the following characteristics: ​ Market value of assets: $177,000,000 Market value of liabilities: $12,000,000 Number of shares outstanding: 7,250,000

Compute the net asset value for a share of a mutual fund with the following characteristics: ​ Market value of assets: $6,257,562,000 Market value of liabilities: $123,800,000 Number of shares outstanding: 134,430,000

Net asset value increases when

A mutual fund's ______ can allow investors to have amounts as low $25 per month transferred from their bank account to purchase shares.

Realized net capital gains that a mutual fund pays out to its investors are called ____ distributions.

____ are received as current income while one owns shares in a mutual fund.

A switching privileges on mutual funds allows shareholders to exchange shares of one mutual fund for shares of

Which of the following is (are) a unique advantage(s) of investing in a family of funds?

The Amalgamated Fund has assets with a market value of $25 million dollars,liabilities of $1 million dollars and 10 million shares outstanding.Its net asset value is

Advantages of mutual funds include

Federal income taxes on annual earnings from mutual funds can be avoided

Open-end mutual fund shares have good liquidity because

Compounding is attained in mutual fund investing through

Compute the net asset value for a share of a mutual fund with the following characteristics: Market value of assets: $177,000,000 Market value of liabilities: $12,000,000 Number of shares outstanding: 7,250,000

Compute the net asset value for a share of a mutual fund with the following characteristics: Market value of assets: $6,257,562,000 Market value of liabilities: $123,800,000 Number of shares outstanding: 134,430,000