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5 Cards in this Set
- Front
- Back
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The management fees pd by an investment co are part of:
A) the underwriting agreement B) the operating expense of the fund C) the custodial fees D) the sales load |
Answer: B
The mgmt fees pd by an investment co are part of the operating expenses of the fund. Custodial fees are also part of the operating expenses. A sales load is a selling cost contained within the underwriting agreement. |
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A mutual fund's expense ratio is found by dividing its expenses by its:
A) average annual net assets B) public offering price C) income D) dividends |
Answer: A
A mutual fund's expense ratio is calculated by dividing its expenses by its average annual net assets. |
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Potential investment co clients should be advised to investigate a fund by looking at which of the following? 2. Number of shares existing 3. Custodian bank 4. Portfolio |
Answer: 1 & 4
Investment policy, track record, portfolio and sales load should all be researched when assessing a fund. The identity of a custodian bank or number of shares outstanding does not bear on its performance or suitability. |
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After a mutual fund's 10th year, performance statistics must show results for each of the following periods EXCEPT:
A) 1 year B) 5 years C) 10 years D) 3 years |
Answer: D
Mutual fund performance statistics must show results for 1, 5 and 10 years, or the life of the fund, whichever is shorter. |
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If a registered representative is comparing 2 mutual funds for a customer, which of the following comparisons would NOT be permissible?
A) Comparing 2 equity funds with slightly different investment objectives, even if the differences and their consequences are carefully explained. B) Comparing a LT bond fund to a shorter term bond fund to demonstrate the trade offs that exist between risk and return. C) Comparing an equity growth fund to a money market fund with the intention of convincing an investor to purchase the growth fund. D) Comparing diversified growth funds from two different fund families. |
Answer: C
A characteristic of money market funds is that they deliberately avoid growth. Thus, for the growth investor, a comparison of a MMF to a growth fund is an unfair comparison. |
