Mutual Funds And Other Investment Companies

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Question 1
Free
Multiple Choice

An investment company:

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A

specializes in investing funds on behalf of a financial institution.

B

is a closed-end fund that invests in real estate.

C

pools funds from individual investors.

D

is a specific type of a bank.

E

is a specialized form of a joint stock company.

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Question 2
Free
Multiple Choice

An investment company that will repurchase shares at any time is called a(n) _____ fund.

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A

hedge

B

closed-end

C

open-end

D

public

E

exchange traded

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Question 3
Free
Multiple Choice

An investment company that issues a fixed number of shares which can only be resold in the open stock market is called a(n) _____ fund.

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A

hedge

B

closed-end

C

open-end

D

public

E

market

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Question 4
Free
Multiple Choice

The value of a load mutual fund's assets less its liabilities,divided by the number of shares outstanding is referred to as the fund's:

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A

net asset value.

B

offering price.

C

open-end value.

D

closed-end value.

E

prime value.

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Question 5
Free
Multiple Choice

A fee that is charged at the time mutual fund shares are purchased by an investor is called a:

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A

contingent deferred sales charge.

B

12b-1 fee.

C

back-end load.

D

front-end load.

E

issuance charge.

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Question 6
Multiple Choice

A 12b-1 fee is a fee charged by a mutual fund:

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A
at the time shares are issued.
B
if shares are sold within a stated period of time.
C
to cover trading costs.
D
to pay the fund's managers.
E
to cover marketing costs.
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Question 7
Multiple Choice

The turnover for a mutual fund refers to:

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A
the length of time an average investor holds fund shares.
B
a measure of trading activity.
C
replacing the fund's investment manager.
D
the annual change in the number of shares outstanding.
E
the percentage change in the ownership of fund shares.
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Question 8
Multiple Choice

An open-end fund which invests solely in short-term debt obligations is called a(n) _____ mutual fund.

Choose correct answer/s
A
growth
B
stock
C
money market
D
asset allocation
E
balanced
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Question 9
Multiple Choice

A fund that is basically an index fund that trades like a closed-end fund is called a(n):

Choose correct answer/s
A
open-end fund.
B
money market fund.
C
exchange-traded fund.
D
mutual fund.
E
depository receipt.
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Question 10
Multiple Choice

Which one of the following describes an investment company that generally has an unrestricted investment strategy and is not accessible to the general public?

Choose correct answer/s
A
mutual fund
B
open-end fund
C
closed-end fund
D
exchange-traded fund
E
hedge fund
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Question 11
Multiple Choice

Which of the following are three key advantages of mutual funds?

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A
diversification, taxes, high initial investments
B
low initial investments, professional management, diversification
C
liquidity, high initial investments, diversification
D
professional management, high initial investments, taxes
E
costs, diversification, liquidity
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Question 12
Multiple Choice

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

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A
Mutual funds generally pay no taxes.
B
Mutual funds are risk-free.
C
Profits on the sale of mutual fund shares are tax-free.
D
All mutual funds are diversified.
E
Investments in mutual funds are guaranteed from loss by a private agency of the federal government.
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Question 13
Multiple Choice

Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?

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A
The number of shares outstanding was fixed at the time the fund was created.
B
If an investor wishes to sell her shares, she must do so by selling to another investor.
C
The NAV exceeds the offering price.
D
The load is expressed as a percentage of the NAV.
E
Investors receive the NAV when shares are sold.
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Question 14
Multiple Choice

Which one of the following statements correctly relates to closed-end funds?

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A
Closed-end funds must sell at the NAV or above.
B
The number of shares outstanding changes on a daily basis as shares are sold and repurchased.
C
Shares in closed-end funds must be held until the funds mature.
D
Once a fund closes, a new investor is unable to purchase shares in that fund.
E
Shares of closed-end funds trade just like stocks.
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Question 15
Multiple Choice

Shares in closed-end funds:

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A
can be resold to the fund at any time.
B
are more popular than shares in open-end funds.
C
may sell for more or less than the NAV.
D
are referred to as mutual fund shares.
E
cannot be resold.
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Question 16
Multiple Choice

A mutual fund is owned by:

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A
its shareholders.
B
a management company.
C
a financial institution.
D
the fund's board of directors.
E
a mutual fund family.
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Question 17
Multiple Choice

A mutual fund is created by which one of the following parties?

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A
fund shareholders
B
fund's board of directors
C
SEC
D
investment advisory firm
E
discount broker
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Question 18
Multiple Choice

Mutual funds are generally created to:

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A
provide tax shelters for investors.
B
generate fees for an advisory firm.
C
eliminate investment risk.
D
avoid taxes.
E
avoid regulation.
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Question 19
Multiple Choice

Investment advisory firms generally provide which of the following services to a mutual fund?
I)marketing
II)record keeping
III)investment research
IV)tax payment

Choose correct answer/s
A
I only
B
II and III only
C
I, II, and III only
D
II, III, and IV only
E
I, II, III, and IV
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Question 20
Multiple Choice

An investment company will be treated as a "regulated investment company" by the Internal Revenue Service provided that it:
I)invests almost all of its assets in bonds,stocks,and other securities.
II)invests solely in U.S.securities.
III)does not invest more than two percent of its assets in any one security.
IV)passes all its realized investment income through to its shareholders.

Choose correct answer/s
A
I and III only
B
I and IV only
C
II and III only
D
I, II, and IV only
E
I, III, and IV only
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