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Exam 16: Investing in Mutual Funds

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Question 31

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The All-Star Basic Value Fund's portfolio is valued at $210 million.The fund has liabilities of $5 million,and the fund's net asset value is $12.50.What is the fund's number of shares outstanding?

A) 5,000,000
B) 7,500,000
C) 12,500,000
D) 16,400,000
E) 38,720,000

F) B) and E)
G) A) and B)

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Question 32

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A mutual fund that invests in investment-grade corporate debt with maturities between 3 and 10 years is called a ____________ fund.

A) long-term bond
B) growth
C) sector
D) income
E) intermediate corporate bond

F) B) and E)
G) C) and D)

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Question 33

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Christopher Fishbone is buying shares in a mutual fund that invests in companies that are all in the natural resources industry.What type of mutual fund is he buying?

Mary Cooper just purchased 100 shares in the All-American Fund.The purchase cost for each share was $20.If this fund charges a 5 percent load,what is the total amount of commission she will pay the investment company?

Contingent deferred sales loads may also be referred to as ____ loads.

While advisory services provide detailed information on common and preferred stocks,there are no advisory services that provide information on mutual funds.

Marcie is seeking interest income but wants to ensure that her investment is as safe as possible.Which type of mutual fund best fits her requirements?

Louise Prescott is buying shares in a mutual fund that invests in larger,well-established companies that are expecting higher-than-average revenues and earnings growth.What type of mutual fund is she buying?

To purchase shares in an open-end mutual fund from an investment company,you may use four options: regular account transactions,voluntary savings plans,contractual savings plans,and reinvestment plans.

Will Hopkins is getting ready to purchase shares in a mutual fund.He will have to pay an upfront sales commission to purchase these shares.What type of shares is he buying?

While mutual fund income dividends are subject to taxation,capital gain distributions are not subject to taxation.

Which one of the following is not a withdrawal option for a mutual fund?

An investment company sponsoring a mutual fund must give existing shareholders a prospectus.

A fee that investors pay when they withdraw their investment from a mutual fund is called a:

Together,all the different management fees,12b-1 fees,and additional operating costs for a specific fund are referred to as a(n) :

When you decide to redeem shares in an open-end mutual fund,the only option is to sell off a specific number of shares.

Over many years,the majority of managed mutual funds outperform the Standard & Poor's 500 stock index.

Mutual funds have been around for a long time and became popular in the U.S.before the Great Depression in 1929.

The New American Enterprise Mutual Fund's portfolio is valued at $120 million.The fund has liabilities of $4 million,and the investment company sponsoring the fund has issued 5,800,000 shares.What is the fund's net asset value?

When you invest in Class A shares,you pay a sales commission when you sell your mutual fund shares.