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66 Cards in this Set

  • Front
  • Back
An investment company:
pools funds from individual investors
An investment company that will repurchase shares at any time is called a(n) _____ fund.
open-end fund
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:
net asset value.
A fee that is charged at the time mutual fund shares are purchased by an investor is called a:
front-end load
A 12b-1 fee is a fee charged by a mutual fund:
to cover marketing costs.
The turnover for a mutual fund refers to:
a measure of trading activity
An open-end fund which invests solely in short-term debt obligations is called a(n) _____ mutual fund.
money market
A fund that is basically an index fund that trades like a closed-end fund is called a(n):
exchange-traded fund
Which one of the following describes an investment company that generally has an unrestricted investment strategy and is not accessible to the general public?
hedge fund
Which of the following are three key advantages of mutual funds?
low initial investments, professional management, diversification
Which one of the following statements is correct concerning mutual funds?
Mutual funds generally pay no taxes
Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?
Investors receive the NAV when shares are sold
what satement correctly relates to closed-end funds
Shares of closed-end funds trade just like stocks
Shares in closed-end funds
may sell for more or less than the NAV
A mutual fund is owned by
its shareholders
A mutual fund is created by which one of the following parties?
investment advisory firm
Mutual funds are generally created to
generate fees for an advisory firm
Investment advisory firms generally provide which of the following services to a mutual fund?
- marketing
- record keeping
- investment research
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
IV. passes all its realized investment income through to its shareholders.
The income earned by a regulated investment company is
taxable income for the fund's shareholders
Today, you are selling shares of an open-end mutual fund and will be charged a CDSC of 3 percent. The price you will receive per share is equal to:
97 percent of the closing NAV
Which one of the following costs can a mutual fund shareholder avoid by holding shares for an extended period of time?
Contingent defferred sales charge
When the offering price and the NAV are the same, you know that a mutual fund is not charging which one of the following fees?
front-end load
Assume a mutual fund is a pure no-load fund. Which of the following costs should an investor still expect to incur?
-management fee
-trading costs
Contingent deferred sales charges:
can be avoided
Mutual fund trading costs:
increase in direct relation to the turnover rate
Which one of the following is NOT included in the fee table found in a mutual fund prospectus?
turnover rate
What are the two best reasons for considering a load fund?
preference for a particular fund manager or a specialized type of fund
Money market mutual funds do what
invest in securities that mature in 90 days or less
The net asset value of a money market mutual fund
is dependent upon the value of the fund's assets
Money market mutual funds can
provide "triple tax free" income
To determine the actual objective of a fund, you should primarily refer to the:
portfolio holdings
Which type of stock fund focuses on maximizing share price appreciation?
capital appreciation
Which type of stock fund focuses primarily on current income?
equity income
small cap funds:
focus more on capital apprecation than on current income
The primary difference between an international fund and a global fund is the fact that:
a global fund invests in U.S. stocks while an international fund does not.
Which type of fund should you purchase if you are interested in investing primarily in countries that have relatively new stock markets?
emerging markets fund
A sector fund
concentrates on investing in one industry or one commodity
A fund which tracks the S&P 500 would best be classified as which type of fund?
Which one of the following characteristics best fits an index fund?
passively managed
You want to purchase shares in a fund and also ensure that your money does not support firms that harm the environment. Which type of fund should you purchase?
social conscience fund
Which one of the following is a general characteristic of a tax-managed fund
low turnover rate
Which one of the following is the distinguishing characteristic of a municipal bond fund?
federally tax-free income
Which one of the following types of bond funds tends to have the highest level of risk?
Rose wants to invest in a bond fund. She is a very conservative investor with a high marginal tax rate. Which one of the following types of bond funds might be most suited for her situation?
short-term municipal
Jim has managed to save $1,000 and wants to start investing. The financial markets make him nervous as he has very limited financial resources. Which one of the following types of funds is probably best for Jim at this time?
Which one of the following types of funds invests in both stocks and bonds and actively attempts to time the market?
flexible portfolio
Which one of the following types of funds is most apt to invest in preferred stocks?
Besides size, how else does a mutual fund style box classify equity funds?
value vs. growth characteristics
Letter grades are most frequently assigned to mutual funds based on the fund's:
historical rates of return.
Trading symbols for mutual funds end in which letter?
While reviewing mutual fund reports, Alex noticed that a fund was reported as "closed". What is the primary reason for closing a fund?
the fund has grown too large in size
You recently purchased a fund at a price of $39.97 per share. The NAV at the time of purchase was $40.67. You must have purchased a(n) _____ fund.
Which one of the following is a common characteristic of a closed-end fund but not of an open-end fund?
If you purchase shares in a closed-end fund at the initial offer price, you should expect to:
immediately see a decrease in the value of your investment
Which one of the following trading symbols is associated with the ETF on the S&P 500 index?
An ETF is best described as:
an index fund that trades like a closed-end fund
Which of the following can you do with an ETF that you cannot do with an open-end fund?
I. sell at mid-day prices
II. short sell
III. buy options on them
Exchange traded notes were first created to mimic _____ index
a commodity
an ETN
is an unseccured debt
ETFs are
claims on shares held in a trust
hedge funds
vast array of invest objectives
Which of the following will exempt a hedge fund from registering with the SEC?
ocking up investor's money for at least two years
A hedge fund may charge a special performance fee which commonly ranges from
20-40% of funds profits
Currently, the term "hedge fund" refers to
any unregistered fund pursuing any type of investment style
A hedge fund:
may charge relatively high fees.