FCS 340 FINAL TEST
What is a load fund? What is a no-load fund? - ANSWERS-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? - ANSWERS-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? -
ANSWERS-Between .25-1.5% of the fund's net asset value
What is a closed-end mutual fund? What is an open-end mutual fund? -
ANSWERS-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? - ANSWERS-
value of a mutual fund / at the end of every day
What is a 12b-1 fee? - ANSWERS-Fee that an investment company pays to avoid
the costs of advertising and marketing a mutual fund
,What is expense ratio? - ANSWERS-Amount investors pay for all of a mutual
fund's management fees and operating fees
Why do investors purchase mutual funds? - ANSWERS-diversification and
professional management
Is there any significant differences between the performance of a load fund and a
no-load fund? Explain. - ANSWERS-No. Up to you if you want to pay the cost of
sales commission that comes with the load fund.
What do experts recommend investors look for in an expense ratio? - ANSWERS-
Less than 1%
What is an equity income fund? - ANSWERS-Invest in stocks issued by company
with long history of paying dividends (provides income to shareholders)
What type of mutual fund for an elderly person concerned about safety of his
money or investment? - ANSWERS-Intermediate US bond fund
What is a growth fund? - ANSWERS-investment in company expecting higher than
average revenue and earn growth (tend to invest in large)
What is an asset allocation fund? - ANSWERS-investment in different types of
investments (stocks, bonds, fixed-income securities, money market)
, What are index funds? How do their performance compare to managed funds? -
ANSWERS-- invest in the same companies included in an index
- index funds outperform managed funds 80% of the time
How can an investor make money with mutual funds? - ANSWERS-shares in a
fund are sold; the profit from the increase in value is called capital gain
What is a "family of funds"? - ANSWERS-Group of mutual funds managed by an
investment company
How can you get information about various mutual funds? - ANSWERS-internet,
mutual fund websites, and advisory services (but you have to pay for those)
What mutual fund earnings are considered taxable income? - ANSWERS-income
dividends
What is the most popular method of purchasing open-end mutual funds? -
ANSWERS-through a regular account transaction
What are the misconceptions about retirement planning? - ANSWERS-plenty of
time, saving a little won't help, you'll spend less after retirement
What is a contractual savings plan? What is a voluntary savings plan? - ANSWERS-
Contractual- investor makes set purchases over certain period of time
What is a load fund? What is a no-load fund? - ANSWERS-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? - ANSWERS-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? -
ANSWERS-Between .25-1.5% of the fund's net asset value
What is a closed-end mutual fund? What is an open-end mutual fund? -
ANSWERS-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? - ANSWERS-
value of a mutual fund / at the end of every day
What is a 12b-1 fee? - ANSWERS-Fee that an investment company pays to avoid
the costs of advertising and marketing a mutual fund
,What is expense ratio? - ANSWERS-Amount investors pay for all of a mutual
fund's management fees and operating fees
Why do investors purchase mutual funds? - ANSWERS-diversification and
professional management
Is there any significant differences between the performance of a load fund and a
no-load fund? Explain. - ANSWERS-No. Up to you if you want to pay the cost of
sales commission that comes with the load fund.
What do experts recommend investors look for in an expense ratio? - ANSWERS-
Less than 1%
What is an equity income fund? - ANSWERS-Invest in stocks issued by company
with long history of paying dividends (provides income to shareholders)
What type of mutual fund for an elderly person concerned about safety of his
money or investment? - ANSWERS-Intermediate US bond fund
What is a growth fund? - ANSWERS-investment in company expecting higher than
average revenue and earn growth (tend to invest in large)
What is an asset allocation fund? - ANSWERS-investment in different types of
investments (stocks, bonds, fixed-income securities, money market)
, What are index funds? How do their performance compare to managed funds? -
ANSWERS-- invest in the same companies included in an index
- index funds outperform managed funds 80% of the time
How can an investor make money with mutual funds? - ANSWERS-shares in a
fund are sold; the profit from the increase in value is called capital gain
What is a "family of funds"? - ANSWERS-Group of mutual funds managed by an
investment company
How can you get information about various mutual funds? - ANSWERS-internet,
mutual fund websites, and advisory services (but you have to pay for those)
What mutual fund earnings are considered taxable income? - ANSWERS-income
dividends
What is the most popular method of purchasing open-end mutual funds? -
ANSWERS-through a regular account transaction
What are the misconceptions about retirement planning? - ANSWERS-plenty of
time, saving a little won't help, you'll spend less after retirement
What is a contractual savings plan? What is a voluntary savings plan? - ANSWERS-
Contractual- investor makes set purchases over certain period of time
