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Multiple Choice Quiz
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1
What type of mutual fund invests in the same companies included in an index like the S&P 500 in order to get the same return as the index?
A)A global stock mutual fund
B)An aggressive growth stock mutual fund
C)A small-cap mutual fund
D)An index mutual fund
E)All of the above
2
What type of mutual fund invests in short-term, highly liquid securities such as certificates of deposit and government securities?
A)A world bond fund
B)A balanced mutual fund
C)A short-term bond fund
D)A money market mutual fund
E)All of the above
3
Which of the following is a potential disadvantage of investing in a mutual fund?
A)Purchase and withdrawal costs
B)Ongoing management and 12b-1 fees
C)Poor performance
D)Inability to control when capital gains distributions occur
E)All of the above are potential disadvantages.
4
Which of the following would not be found in a prospectus of a mutual fund?
A)A description of the fund's past performance
B)A statement describing the types of investments contained in the fund's portfolio
C)Information about the fund's management
D)Information about how to open an account with the investment company
E)All of the above would be found in a prospectus.
5
You own 1000 shares of a mutual fund and you originally paid $10,000 for those shares. During the year you earn income dividends of $.26 per share and had capital gains distributions of $1.12 per share. At the end of the year you sold the shares of the mutual fund for $12.50 per share. What is your dollar amount of total return on this mutual fund for the year?
A)$2500
B)$3880
C)$1380
D)$1630
E)None of the above
6
You buy 250 shares of a mutual fund for $40 per share. During the year you earn $.63 per share in income dividends and also earn $.88 per share in capital gains distributions. You sell the shares of the mutual fund at the end of the year for $45 per share. What is the percentage total return you earned during the year?
A)12.50%
B)6.25%
C)3.78%
D)16.28%
E)None of the above
7
What type of mutual fund invests in high-yield, high-risk bonds?
A)Municipal bond fund
B)Long-term corporate bond fund
C)Short-term government bond fund
D)High-yield bond fund
E)None of the above
8
What type of mutual fund share are you purchasing if there is no commission to buy or sell the shares but a higher ongoing 12b-1 fee?
A)No-load shares
B)Class A shares
C)Class B shares
D)Class C shares
E)None of the above
9
A(n) _______________ is a mutual fund where the investor pays a fee as high as 8 ½ percent every time they purchase shares. This fee is sometimes called a sales fee.
A)Closed-ended mutual fund
B)Open-ended mutual fund
C)Load mutual fund
D)No-load mutual fund
E)None of the above
10
One of the ways you can earn a return on a mutual fund is _______________. These are the payments made to shareholders as a result of the sale of securities held in the fund.
A)Income dividends
B)Capital gain distributions
C)Capital gains
D)Capital losses
E)None of the above





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