Question 1

A fund that is designed to match the performance of a measure such as the S & P 500 or the Russell 2000 is called a(n)

Accepted Answer

A)   index fund.
B)   targeted fund.
C)   sector fund.
D)   block fund.

Question 2

Like ordinary stocks, exchange traded funds (ETFs)can be sold short.

Accepted Answer

A) True 
 B)False

Question 3

The mutual fund, and not the investor, is responsible for all income taxes on capital gains and dividends earned by the fund.

Accepted Answer

A) True 
 B)False

Question 4

The primary objective of growth mutual funds is capital appreciation with a high level of current income.

Accepted Answer

A) True 
 B)False

Question 5

Much of the success of a mutual fund depends on the investment skills of the fund manager.

Accepted Answer

A) True 
 B)False

Question 6

Investors who seek triple (federal, state, and local) tax-free income should invest in ________ bond funds.

Accepted Answer

A)   convertible
B)   indexed
C)   mortgage-backed
D)   single-state municipal

Question 7

Income from ________ is exempt from federal income taxes?

Accepted Answer

A)   money market funds
B)   municipal bond funds
C)   government bond funds
D)   REITs

Question 8

Investors in hedge funds have the legal status of

Accepted Answer

A)   shareholders.
B)   limited partners.
C)   general partners.
D)   trustees.

Question 9

Most exchange-traded funds are index funds.

Accepted Answer

A) True 
 B)False

Question 10

As a general rule, the time to buy a closed-end mutual fund is when the fund's premium is approximately 5 percent higher than its past average.

Accepted Answer

A) True 
 B)False

Question 11

Mutual funds tend to outperform the market.

Accepted Answer

A) True 
 B)False

Question 12

One characteristic of most index funds is that such funds typically

Accepted Answer

A)   produce a large dollar amount of realized capital gains every year.
B)   have a very low-cost structure with respect to management fees and transaction fees.
C)   charge high front-end loads.
D)   are designed to "beat the market."

Question 13

Which of the following statements best describes the legal organization of mutual funds?

Accepted Answer

A)   funds are organized as a single entity that handles all functions such as custody and investment decisions.
B)   funds split their basic functions such as record keeping and investment decisions among two or more companies.
C)   funds are owned by the company that manages them.
D)   a distributor keeps track of investment and redemption requests from shareholders and maintains other shareholder records.

Question 14

Information for ABC Fund is

The market-based holding period return for ABC Mutual Fund is

Accepted Answer

A)   -19.1%.
B)   -14.6%.
C)   0.3%.
D)   9.4%.

Question 15

Ashley believes that the price of gas and oil is about to rise and energy company profits will follow.She should invest in

Accepted Answer

A)   an asset allocation fund.
B)   an emerging market fund.
C)   a sector fund.
D)   an aggressive growth fund.

Question 16

One advantage gained by investing in a bond fund rather than in individual bonds is the

Accepted Answer

A)   ability to earn fully compounded rates of return.
B)   government guarantee protecting the bond principal.
C)   ability to earn a capital gain.
D)   guarantee that the bonds will be held to maturity to avoid market fluctuations.

Question 17

Funds that consistently earn above average rates of return also tend to charge higher sales commissions.

Accepted Answer

A) True 
 B)False

Question 18

Every mutual fund has a stated investment objective.Disclosure of the investment objective is required by the SEC, and is used to classify a mutual fund into one of several categories.Briefly explain the investment objective of each of the following categories.
(a)growth funds
(b)aggressive growth funds
(c)equity-income funds
(d)balanced funds

Accepted Answer

(a)Growth funds seek capital appreciatio...

Question 19

The ability to automatically buy additional fund shares using the dividend income generated by the fund is called a(n)

Accepted Answer

A)   automatic investment plan.
B)   automatic reinvestment plan.
C)   systematic withdrawal plan.
D)   conversion plan.

Question 20

Which of the following are advantages of bond funds over individual bonds?
I.greater liquidity.
II.maturities matched to the investor's time horizon
III.automatic reinvestment of interest payments.
IV.diversification

Accepted Answer

A)   I and III only
B)   I, III, and IV only
C)   I, II, and IV only
D)   II, III and IV only

Exam 12: Mutual Funds: Professionally Managed Portfolios

Investors in hedge funds have the legal status of

Correct Answer
verified

Funds that consistently earn above average rates of return also tend to charge higher sales commissions.

Correct Answer
verified

Income from ________ is exempt from federal income taxes?

Correct Answer
verified

The ability to automatically buy additional fund shares using the dividend income generated by the fund is called a(n)

Correct Answer
verified

Which of the following statements best describes the legal organization of mutual funds?

Correct Answer
verified

One characteristic of most index funds is that such funds typically

Correct Answer
verified

Which of the following are advantages of bond funds over individual bonds? I.greater liquidity. II.maturities matched to the investor's time horizon III.automatic reinvestment of interest payments. IV.diversification

Correct Answer
verified

Much of the success of a mutual fund depends on the investment skills of the fund manager.

Correct Answer
verified

Correct Answer
verified
(a)Growth funds seek capital appreciatio...
View Answer

Ashley believes that the price of gas and oil is about to rise and energy company profits will follow.She should invest in

Correct Answer
verified

Investors who seek triple (federal, state, and local) tax-free income should invest in ________ bond funds.

Correct Answer
verified

The mutual fund, and not the investor, is responsible for all income taxes on capital gains and dividends earned by the fund.

Correct Answer
verified

One advantage gained by investing in a bond fund rather than in individual bonds is the

Correct Answer
verified

Information for ABC Fund is The market-based holding period return for ABC Mutual Fund is

Correct Answer
verified

Mutual funds tend to outperform the market.

Correct Answer
verified

A fund that is designed to match the performance of a measure such as the S & P 500 or the Russell 2000 is called a(n)

Correct Answer
verified

As a general rule, the time to buy a closed-end mutual fund is when the fund's premium is approximately 5 percent higher than its past average.

Correct Answer
verified

The primary objective of growth mutual funds is capital appreciation with a high level of current income.

Correct Answer
verified

Most exchange-traded funds are index funds.

Correct Answer
verified

Like ordinary stocks, exchange traded funds (ETFs)can be sold short.

Correct Answer
verified

Exam 12: Mutual Funds: Professionally Managed Portfolios

Investors in hedge funds have the legal status of

Correct AnswerverifiedShow Answer

Funds that consistently earn above average rates of return also tend to charge higher sales commissions.

Correct AnswerverifiedShow Answer

Income from ________ is exempt from federal income taxes?

Correct AnswerverifiedShow Answer

The ability to automatically buy additional fund shares using the dividend income generated by the fund is called a(n)

Correct AnswerverifiedShow Answer

Which of the following statements best describes the legal organization of mutual funds?

Correct AnswerverifiedShow Answer

One characteristic of most index funds is that such funds typically

Correct AnswerverifiedShow Answer

Which of the following are advantages of bond funds over individual bonds? I.greater liquidity. II.maturities matched to the investor's time horizon III.automatic reinvestment of interest payments. IV.diversification

Correct AnswerverifiedShow Answer

Much of the success of a mutual fund depends on the investment skills of the fund manager.

Correct AnswerverifiedShow Answer

Correct Answerverified(a)Growth funds seek capital appreciatio...View AnswerShow Answer

Ashley believes that the price of gas and oil is about to rise and energy company profits will follow.She should invest in

Correct AnswerverifiedShow Answer

Investors who seek triple (federal, state, and local) tax-free income should invest in ________ bond funds.

Correct AnswerverifiedShow Answer

The mutual fund, and not the investor, is responsible for all income taxes on capital gains and dividends earned by the fund.

Correct AnswerverifiedShow Answer

One advantage gained by investing in a bond fund rather than in individual bonds is the

Correct AnswerverifiedShow Answer

Information for ABC Fund is The market-based holding period return for ABC Mutual Fund is

Correct AnswerverifiedShow Answer

Mutual funds tend to outperform the market.

Correct AnswerverifiedShow Answer

A fund that is designed to match the performance of a measure such as the S & P 500 or the Russell 2000 is called a(n)

Correct AnswerverifiedShow Answer

As a general rule, the time to buy a closed-end mutual fund is when the fund's premium is approximately 5 percent higher than its past average.

Correct AnswerverifiedShow Answer

The primary objective of growth mutual funds is capital appreciation with a high level of current income.

Correct AnswerverifiedShow Answer

Most exchange-traded funds are index funds.

Correct AnswerverifiedShow Answer

Like ordinary stocks, exchange traded funds (ETFs)can be sold short.

Correct AnswerverifiedShow Answer

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(a)Growth funds seek capital appreciatio...
View Answer

Correct Answer
verified

Correct Answer
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