Question 1

Mutual funds can be fully invested in federal bonds,municipal bonds,gold,silver,stocks,bonds,or a variety of stocks,bonds,and other investments.

Accepted Answer

Mutual funds can invest in a wide range of securities, including federal bonds, municipal bonds, gold, silver, stocks, and a variety of other investments.

Question 2

Since in most cases their compensation is tied to the performance of their funds,fund managers are motivated to make their funds grow.

Accepted Answer

Fund managers receive a percentage of the assets under their management as compensation, so they have a financial incentive to make their funds grow.

Question 3

List how an actively managed fund differs from an index fund.

Accepted Answer

The answer of List how an actively managed fund differs...

Question 4

A front-end load is the fee charged when you sell a mutual fund,which could include the commission of the financial planner or selling agent who sold you the funds.

Accepted Answer

A front-end load is the fee charged when you buy a mutual fund, not when you sell it.

Question 5

Explain how a closed-end fund differs from an open-end fund?

Accepted Answer

The answer of Explain how a closed-end fund differs from...

Question 6

_________________ investing describes an investment strategy which seeks to maximize both financial return and social good.

Accepted Answer

Socially responsible investing refers to an investment strategy that aims to generate not just financial returns, but also positive social and environmental impacts. It seeks to align investors' values and beliefs with their investment decisions, encouraging companies to act responsibly towards society and the environment.

Question 7

No-load funds often outperform load funds--especially when you consider that 100% of the investment is working for you.

Accepted Answer

No-load funds do not have sales charges or commissions, which can eat away at a significant portion of your investment. Therefore, all of your investment is working for you, potentially leading to higher returns compared to load funds.

Question 8

Where can you find the most complete information on a mutual fund's holdings,expense ratio,and loads?

Accepted Answer

The most complete information on a mutual fund's holdings, expense ratio, and loads can be found in the fund's prospectus. The prospectus contains all the necessary legal disclosures and information about the fund, including its investment strategy, risks, fees, and expenses. It is important for investors to review the prospectus before investing in any mutual fund to ensure they understand the fund's objectives and the costs associated with investing in it. While the fund's annual report may provide some information on its performance and holdings, it may not include updated information on expenses and loads. Googling or contacting the fund manager may provide some information, but the prospectus remains the most comprehensive source of information on a mutual fund.

Question 9

Measuring fund performance against the S&P 500 can show the consistency of the fund's returns; only about _________________ of the fund managers beat the S&P 500 consistently and they usually have higher expense ratios than index funds.

Accepted Answer

The answer of Measuring fund performance against the S&P 500...

Question 10

Mutual funds can be purchased directly from mutual fund companies,financial planners,financial advisers,full service brokerages houses,discount brokerage houses,insurance companies,and banks.

Accepted Answer

Mutual funds can be purchased from various sources, including those listed in the statement.

Question 11

All mutual funds have an expense ratio; however,there are no-load funds as well as funds with loads.

Accepted Answer

All mutual funds have an expense ratio, which is the fee charged by the fund to cover its operating costs. However, some mutual funds do not charge a sales load (a fee to buy or sell the fund) and are known as no-load funds. Other funds may charge a sales load, which can range from 1-5% or more of the investment amount.

Question 12

Explain how mutual funds are classified.

Accepted Answer

The answer of Explain how mutual funds are classified....

Question 13

If you were to invest all of your money in a single company and it went bankrupt,you would not lose everything.

Accepted Answer

If you invest all of your money in a single company and it goes bankrupt, you would lose all of your investment in that company. It is always recommended to diversify your investments to reduce the risk of losing all your money.

Question 14

Exchange-traded funds are like mutual funds in that they are often structured as an open-end investment company,but they also resemble stock as they are traded throughout the day on a stock exchange.

Accepted Answer

ETFs are structured like open-end investment companies and are traded on stock exchanges throughout the day like stocks.

Question 15

All mutual funds have an expense ratio,which they use to assess the owners of the mutual fund operating expenses.

Accepted Answer

All mutual funds have an expense ratio which is a percentage of the fund's assets that is used to cover operating expenses such as management fees, administrative costs, and marketing expenses. This expense ratio is typically deducted from the fund's returns and is disclosed in the fund's prospectus.

Question 16

An advantage of buying mutual funds from a full-service broker or financial planner is _________________.

Accepted Answer

Buying mutual funds from a full-service broker or financial planner provides the investor with professional advice and help in making investment decisions. Full-service brokers and financial planners can guide investors in choosing the right mutual fund that suits their investment goals and risk tolerance. However, there are fees and commissions involved in buying mutual funds from a full-service broker or financial planner, which can lower your returns.

Question 17

The Morningstar Style Box evaluates a mutual fund based on _________________.

Accepted Answer

The Morningstar Style Box evaluates a mutual fund based on the capital asset size of the companies it holds and whether the companies in the fund are value-based, growth, or a blend of value-based and growth. It helps investors identify the investment style of the fund and how it fits into their overall portfolio.

Question 18

What do the axes on the Morningstar Style Box indicate?

Accepted Answer

Both options are correct. The Morningstar Style Box is a tool used to categorize mutual funds based on their investment style. The vertical axis indicates the size of the companies in which the fund invests (large, medium, or small cap), while the horizontal axis is based on company valuation, distinguishing whether the fund invests in value-based companies (based on the price/earnings ratio), growth companies, or a blend of value and growth. Therefore, both option A and B are correct.

Question 19

The _________________ the turnover,the more you will pay in transaction fees (incorporated in the expense ratio),and the more you will pay in capital gains when the assets are sold._________________ turnover funds will have lower transaction costs and lower capital gains.

Accepted Answer

Higher turnover in a fund leads to more frequent buying and selling of assets, resulting in higher transaction fees and capital gains taxes. Conversely, low turnover funds incur fewer transaction costs and capital gains.

Question 20

There are two kinds of prospectuses: (1)the statutory prospectus and (2)the summary prospectus; however,the summary version does not include information on the fund's investment objectives,its strategies for achieving the objectives,the principal risks of investing in the fund,the fund's fees and expenses,and its past performance.

Accepted Answer

The summary prospectus does include information on the fund's investment objectives, strategies for achieving those objectives, principal risks of investing in the fund, the fund's fees and expenses, and its past performance. This is designed to provide investors with key information in a concise format.

Quiz 12: Mutual Funds

Mutual funds can be fully invested in federal bonds,municipal bonds,gold,silver,stocks,bonds,or a variety of stocks,bonds,and other investments.

Since in most cases their compensation is tied to the performance of their funds,fund managers are motivated to make their funds grow.

List how an actively managed fund differs from an index fund.

A front-end load is the fee charged when you sell a mutual fund,which could include the commission of the financial planner or selling agent who sold you the funds.

Explain how a closed-end fund differs from an open-end fund?

_________________ investing describes an investment strategy which seeks to maximize both financial return and social good.

No-load funds often outperform load funds--especially when you consider that 100% of the investment is working for you.

Where can you find the most complete information on a mutual fund's holdings,expense ratio,and loads?

Measuring fund performance against the S&P 500 can show the consistency of the fund's returns; only about _________________ of the fund managers beat the S&P 500 consistently and they usually have higher expense ratios than index funds.

Mutual funds can be purchased directly from mutual fund companies,financial planners,financial advisers,full service brokerages houses,discount brokerage houses,insurance companies,and banks.

All mutual funds have an expense ratio; however,there are no-load funds as well as funds with loads.

Explain how mutual funds are classified.

If you were to invest all of your money in a single company and it went bankrupt,you would not lose everything.

Exchange-traded funds are like mutual funds in that they are often structured as an open-end investment company,but they also resemble stock as they are traded throughout the day on a stock exchange.

All mutual funds have an expense ratio,which they use to assess the owners of the mutual fund operating expenses.

An advantage of buying mutual funds from a full-service broker or financial planner is _________________.

The Morningstar Style Box evaluates a mutual fund based on _________________.

What do the axes on the Morningstar Style Box indicate?

The _ the turnover,the more you will pay in transaction fees (incorporated in the expense ratio) ,and the more you will pay in capital gains when the assets are sold._ turnover funds will have lower transaction costs and lower capital gains.

Quiz 12: Mutual Funds

Mutual funds can be fully invested in federal bonds,municipal bonds,gold,silver,stocks,bonds,or a variety of stocks,bonds,and other investments.

Since in most cases their compensation is tied to the performance of their funds,fund managers are motivated to make their funds grow.

List how an actively managed fund differs from an index fund.

A front-end load is the fee charged when you sell a mutual fund,which could include the commission of the financial planner or selling agent who sold you the funds.

Explain how a closed-end fund differs from an open-end fund?

_________________ investing describes an investment strategy which seeks to maximize both financial return and social good.

No-load funds often outperform load funds--especially when you consider that 100% of the investment is working for you.

Where can you find the most complete information on a mutual fund's holdings,expense ratio,and loads?

Measuring fund performance against the S&P 500 can show the consistency of the fund's returns; only about _________________ of the fund managers beat the S&P 500 consistently and they usually have higher expense ratios than index funds.

Mutual funds can be purchased directly from mutual fund companies,financial planners,financial advisers,full service brokerages houses,discount brokerage houses,insurance companies,and banks.

All mutual funds have an expense ratio; however,there are no-load funds as well as funds with loads.

Explain how mutual funds are classified.

If you were to invest all of your money in a single company and it went bankrupt,you would not lose everything.

Exchange-traded funds are like mutual funds in that they are often structured as an open-end investment company,but they also resemble stock as they are traded throughout the day on a stock exchange.

All mutual funds have an expense ratio,which they use to assess the owners of the mutual fund operating expenses.

An advantage of buying mutual funds from a full-service broker or financial planner is _________________.

The Morningstar Style Box evaluates a mutual fund based on _________________.

What do the axes on the Morningstar Style Box indicate?

The _________________ the turnover,the more you will pay in transaction fees (incorporated in the expense ratio) ,and the more you will pay in capital gains when the assets are sold._________________ turnover funds will have lower transaction costs and lower capital gains.

The _ the turnover,the more you will pay in transaction fees (incorporated in the expense ratio) ,and the more you will pay in capital gains when the assets are sold._ turnover funds will have lower transaction costs and lower capital gains.