Chapter 13-15 - Chapter 13 Review Questions True/False 1...

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Chapter 13 Review Questions True/False 1. The most important advantage of a mutual fund is pooled diversification. 2. The net asset value (NAV) per share is found by dividing the market value of the fund’s securities less the fund’s liabilities by the number of shares outstanding. 3. Spiders are exchange-traded funds based on the Dow Jones Industrial Average. 4. A fund’s objective must be stated in its prospectus. 5. A real estate investment trust that invests only in mortgages is called an equity trust. 6. When you buy shares in a load fund, you will pay the NAV. 7. Loads are transaction charges for mutual funds. 8. A 12(b)01 fee can only be charged by a load mutual fund. 9. Mutual funds may be classified by the types of securities they purchase. 10.For most investors, the best way to deal in foreign securities is through an international mutual fund. Multiple Choice 1. What type of REIT is most attractive to income oriented investors? a. Equity b. Mortgage c. Hybrid d. Unit trust e. Exchange-traded 2. The maximum load a mutual fund can charge a. 7 % of the net asset value. b. 7 % of the purchase price. c. 8 ½ % of the net asset value. d. 8 ½ % of the purchase price. e. none of these.
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3. A no-load fund has no a. transaction charges. b. administrative charges. c. management charges. d. tax charges. e. 12(b)-1 fees. 4. An annual fee charged by some mutual funds to cover marketing and distribution expenses is the a. management fee. b. back-end load. c. transaction fee. d. 12(b)-1 fee. e. low-load. 5. Both load and no-load funds will always charge a a. transaction fee. b. 12(b)-1 fee. c. management fee. d. fee on the sale of the shares. e. redemption fee. 6. Mutual funds may be bought and sold through a. mutual savings banks and brokerage firms. b. funds salespeople and mutual savings banks. c. brokerage firms and fund salespeople. d. brokerage firms and funds exchange. e. fund exchange and fund salespeople. 7. What is (are) the difference(s) between the Class A, Class B, and Class C mutual fund shares offered by financial services firms? a. The level of service offered by the firm. b. The level of diversification in the fund. c. The tax implications of the investment return. d. The types of loads and fees charged. e. Could be any of the above. 8. Investment company earnings come from
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a. capital gains. b. dividend from stocks. c. interest from bonds. d. interest and dividends. e. interest, dividends, and capital gains. 9. A(n)_____fund is quite speculative. a. balanced b. growth c. equity income d. aggressive growth e. money market 10. Which of the following bond mutual funds would provide tax-free income? a. Government bond fund b. Municipal bond fund c. Convertible bond fund d. Mortgage-backed bond fund e. All of the above 11. Index funds have provided competitive rates of return because a. their costs are lower than other stock funds. b. it is difficult to outperform the market.
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Chapter 13-15 - Chapter 13 Review Questions True/False 1...

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