Question 1

Returns on exchange traded funds may come from
I.capital gains.
II.dividends.
III.increases in the fund's premium.
IV.decreases in the fund's discount.

Accepted Answer

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

Question 2

An open-end investment company

Accepted Answer

A)  is involved in all trades of its shares.
B)  sells shares at a discounted NAV price.
C)  trades like a stock on the exchanges.
D)  has a set number of shares.

Question 3

Income distributed by a mutual fund from which one of the following sources receives a preferential tax rate of 15%?

Accepted Answer

A)  dividends on common stock
B)  interest on bonds
C)  dividends from most preferred stocks
D)  dividends from REITs

Question 4

The commission charged when shares of an open-end mutual fund are purchased is called a

Accepted Answer

A)  management fee.
B)  back-end load.
C)  front-end load.
D)  12(b) -1 fee.

Question 5

A mutual fund is generally more tax efficient when it has a ________ turnover rate and a ________ dividend yield.

Accepted Answer

A)  low; low
B)  low; high
C)  high; low
D)  high; high

Question 6

Reasons to invest in mutual fund include
I.a wide range of services such as automatic reinvestment and systematic withdrawal plans.
II.minimizing the time and effort spent choosing securities.
III.rates of return that consistently beat the market averages.
IV.participation in a variety of tax sheltered and tax deferred retirement programs.

Accepted Answer

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

Question 7

Nearly all mutual funds operate as regulated investment companies.This means that

Accepted Answer

A)  they are no-load funds.
B)  portfolio decisions are mandated by government authorities.
C)  they do not pay taxes on their income.
D)  their investments are guaranteed by the FDIC.

Question 8

Systematic withdrawal plans from mutual funds usually require a minimum investment of at least $100,000.

Accepted Answer

A) True 
 B)False

Question 9

Socially responsible funds only hold stocks of companies that meet the fund's ethical guidelines.

Accepted Answer

A) True 
 B)False

Question 10

The number of shares available in an exchange-traded fund (ETF)can be increased or decreased according to demand for the shares.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following are advantages of international funds?
I.greater diversification
II.potentially higher returns
III.income is taxed at a lower rate
IV.ease of investing compared to buying individual foreign securities

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

Question 12

Which one of the following statements concerning mutual funds is correct?

Accepted Answer

A)  The selection of individual securities remains with the mutual fund investor.
B)  Mutual funds were first created in the 1980s.
C)  The mutual fund industry is the largest financial intermediary in the United States.
D)  Mutual funds are generally highly concentrated portfolios.

Question 13

One characteristic of 12(b) -1 charges is that they are payable

Accepted Answer

A)  only in years that the mutual fund shows an increase in net asset value.
B)  each year regardless of the performance of the mutual fund.
C)  only during the first year the fund is owned.
D)  only when shares in the fund are sold.

Question 14

The discount or premium on a closed-end mutual fund can be as much as 25 percent.

Accepted Answer

A) True 
 B)False

Question 15

One drawback of investing in mutual funds is the

Accepted Answer

A)  annual management fee.
B)  lack of liquidity of fund shares.
C)  amount required for the initial investment.
D)  lack of information on the performance of the fund.

Question 16

Index fund investors should purchase at least two funds with the same objective to assure proper diversification.

Accepted Answer

A) True 
 B)False

Question 17

What are some of the advantages of investing through mutual funds? Name at least three.

Accepted Answer

Mutual funds offer professional manageme...

Question 18

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

Accepted Answer

A)  diversification among issuers.
B)  most bond funds outperform their benchmarks.
C)  immunity from interest rate changes.
D)  guarantee that the bonds will be held to maturity to avoid market fluctuations.

Question 19

Mutual funds are used extensively as retirement investments.

Accepted Answer

A) True 
 B)False

Question 20

Closed-end funds and exchange-traded-funds (ETFs)are both liquidated by selling them on the open market.

Accepted Answer

A) True 
 B)False

Exam 12: Mutual Funds and Exchange-Traded Funds

Index fund investors should purchase at least two funds with the same objective to assure proper diversification.

Correct Answer
verified

What are some of the advantages of investing through mutual funds? Name at least three.

Correct Answer
verified
Mutual funds offer professional manageme...
View Answer

Mutual funds are used extensively as retirement investments.

Correct Answer
verified

Closed-end funds and exchange-traded-funds (ETFs)are both liquidated by selling them on the open market.

Correct Answer
verified

The commission charged when shares of an open-end mutual fund are purchased is called a

Correct Answer
verified

One drawback of investing in mutual funds is the

Correct Answer
verified

Correct Answer
verified

Returns on exchange traded funds may come from I.capital gains. II.dividends. III.increases in the fund's premium. IV.decreases in the fund's discount.

Correct Answer
verified

The discount or premium on a closed-end mutual fund can be as much as 25 percent.

Correct Answer
verified

An open-end investment company

Correct Answer
verified

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

Correct Answer
verified

Nearly all mutual funds operate as regulated investment companies.This means that

Correct Answer
verified

Socially responsible funds only hold stocks of companies that meet the fund's ethical guidelines.

Correct Answer
verified

Income distributed by a mutual fund from which one of the following sources receives a preferential tax rate of 15%?

Correct Answer
verified

Which one of the following statements concerning mutual funds is correct?

Correct Answer
verified

Which of the following are advantages of international funds? I.greater diversification II.potentially higher returns III.income is taxed at a lower rate IV.ease of investing compared to buying individual foreign securities

Correct Answer
verified

A mutual fund is generally more tax efficient when it has a turnover rate and a dividend yield.

Correct Answer
verified

One characteristic of 12(b) -1 charges is that they are payable

Correct Answer
verified

Systematic withdrawal plans from mutual funds usually require a minimum investment of at least $100,000.

Correct Answer
verified

The number of shares available in an exchange-traded fund (ETF)can be increased or decreased according to demand for the shares.

Correct Answer
verified

Exam 12: Mutual Funds and Exchange-Traded Funds

Index fund investors should purchase at least two funds with the same objective to assure proper diversification.

Correct AnswerverifiedShow Answer

What are some of the advantages of investing through mutual funds? Name at least three.

Correct AnswerverifiedMutual funds offer professional manageme...View AnswerShow Answer

Mutual funds are used extensively as retirement investments.

Correct AnswerverifiedShow Answer

Closed-end funds and exchange-traded-funds (ETFs)are both liquidated by selling them on the open market.

Correct AnswerverifiedShow Answer

The commission charged when shares of an open-end mutual fund are purchased is called a

Correct AnswerverifiedShow Answer

One drawback of investing in mutual funds is the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Returns on exchange traded funds may come from I.capital gains. II.dividends. III.increases in the fund's premium. IV.decreases in the fund's discount.

Correct AnswerverifiedShow Answer

The discount or premium on a closed-end mutual fund can be as much as 25 percent.

Correct AnswerverifiedShow Answer

An open-end investment company

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Nearly all mutual funds operate as regulated investment companies.This means that

Correct AnswerverifiedShow Answer

Socially responsible funds only hold stocks of companies that meet the fund's ethical guidelines.

Correct AnswerverifiedShow Answer

Income distributed by a mutual fund from which one of the following sources receives a preferential tax rate of 15%?

Correct AnswerverifiedShow Answer

Which one of the following statements concerning mutual funds is correct?

Correct AnswerverifiedShow Answer

Which of the following are advantages of international funds? I.greater diversification II.potentially higher returns III.income is taxed at a lower rate IV.ease of investing compared to buying individual foreign securities

Correct AnswerverifiedShow Answer

A mutual fund is generally more tax efficient when it has a ________ turnover rate and a ________ dividend yield.

Correct AnswerverifiedShow Answer

One characteristic of 12(b) -1 charges is that they are payable

Correct AnswerverifiedShow Answer

Systematic withdrawal plans from mutual funds usually require a minimum investment of at least $100,000.

Correct AnswerverifiedShow Answer

The number of shares available in an exchange-traded fund (ETF)can be increased or decreased according to demand for the shares.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Mutual funds offer professional manageme...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

A mutual fund is generally more tax efficient when it has a turnover rate and a dividend yield.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified