FCS 340 Final Test Questions with Complete Solutions

FCS 340 Final Test Questions with Complete Solutions What is a closed-end mutual fund? What is an open-end mutual fund? - ANSWER Closed- shares issued by an investment company only when fund is organized Open- shares issued and redeemed by the investment company at the request of investors What is the net asset value? When is the net asset value calculates? - ANSWER value of a mutual fund / at the end of every day What is a load fund? What is a no-load fund? - ANSWER Load- a mutual fund where investors pay commission every time they buy shares No-load- individual investors pay no sales charge What is a contingent deferred sales load? - ANSWER 1-5% charge that shareholders pay when they sell shares in a mutual fund How much can you expect to pay in management fees for most mutual funds? - ANSWER Between .25-1.5% of the fund's net asset value What is a 12b-1 fee? - ANSWER Fee that an investment company pays to avoid the costs of advertising and marketing a mutual fund What is expense ratio? - ANSWER Amount investors pay for all of a mutual fund's management fees and operating fees Why do investors purchase mutual funds? - ANSWER diversification and professional management Is there any significant differences between the performance of a load fund and a no-load fund? Explain. - ANSWER No. Up to you if you want to pay the cost of sales commission that comes with the load fund.