FCS 3400 Final Review Chapters 11- 14 Plus Comprehensive - ANSWER-
What is a closed-end mutual fund? an open-end mutual fund? - ANSWER-Closed:
shares are issued when it is created, open shares can be made when someone wants
one
What is net asset value? How is the net asset value calculated? - ANSWER-Value of
the mutual funds portfolio value of mutual funds in portfolio-liabilities / number of
outstanding shares. Calculated at the close of each day
What is a load fund? a no-load fund? - ANSWER-Load fund- you pay commission when
you purchase it no load fund- a mutal fund where there is not a sales charge
What is a contingent deferred sales load? - ANSWER-1-5% fee is paid sometimes
called a b fund you pay when you withdraw
How much can you expect to pay in management fees for most mutual funds? -
ANSWER-Usually .25-1.25% you will have to pay
What is a 12b-1 fee? - ANSWER-fee for marketing or distributing a mutual fund
What is expense ratio? - ANSWER-all the fees (desired 1% or less)
Why do investors purchase mutual funds? - ANSWER-Professional management 2.
Diversification
Is there a significant difference between the performance of a load fund and a no-load
fund? Explain. - ANSWER-No. They can both do the same
What do experts recommend investors look for in an expense ratio? - ANSWER-less
than 1%
What is an equity income fund? - ANSWER-invest in stocks with a company that will
pay dividends
What type of mutual fund would you recommend for an elderly person who is concerned
about the safety of his or her investment? - ANSWER-intermediate U.S. bonds
What is a growth fund? - ANSWER-one that invests in stocks that are growing rapidly
What is an asset allocation fund? - ANSWER-one that focuses on diversification
, What are index funds? How do their performance compare to managed funds? -
ANSWER-managed funds have a person managing it- index fund is based on numbers-
the indexed funds out perform the managed funds 85% of the time
How can an investor make money with mutual funds? - ANSWER-income dividends,
buy and sell for a higher price, from capital gain distributions
What is a "family of funds"? one investment company with a group of funds which you
can move from one to another without costing a lot of money - ANSWER-
How can you get information about various mutual funds? - ANSWER-internet, mutual
fund website, pay an advisory service
What mutual fund earnings are considered taxable income? - ANSWER-income
dividends, capital gain distributions and capital gains
What is the most popular method of purchasing open-end mutual funds? - ANSWER-
regular account transaction
What are the misconceptions about retirement planning? - ANSWER-having enough
money with social security alone, company pension will be enough, not many expenses
or how long they need it
What is a contractual savings plan? a voluntary savings plan? - ANSWER-making a
contract with a company that you are going to invest by making regular purchases over
a period of time voluntary- decide how much and when
How do wills and trusts help in planning your estate? - ANSWER-wills let people know
what you want trusts allow people to get money without going through probate court and
also bypass taxes
What are the important steps in retirement planning? - ANSWER-1. analyze current
assets and liabilities (health, clothing)
What are defined-contribution plans? What are defined-benefit plans? - ANSWER-
Defined contribution - 401-k benefit- contract saying what theyll give you
What is a will? notes of a persons mind as to how their property will be distributes -
ANSWER-
Define the following wills: simple, traditional marriage share, exemption trust, stated
amount, formal will, holographic, statutory. - ANSWER-simple- all to the spouse,
traditional- marriage 50% to spouse and rest to others, exemption some to people some
to trust, stated amout telling where everyone gets stuff, formal will- with a lawyer , safe,
hollographic- may not be legal can be contested hand-written, statutroy- usuing a form
off the internet
What does it mean to be intestate? - ANSWER-died without a will
What is a codicil? adding an ammendment - ANSWER-
Define types of trusts: revocable, irrevocable, credit-shelter, disclaimer, living,
testamentary - ANSWER-revocable v. irrevocable- changing it ,credit-shelter- common
everything transfers for spouse disclaimer- disclaim some, living- you set up while youre
alive to see how money is managed, testamentary- goes into effect when dead
What does the term liquidity mean? - ANSWER-covert it to cash
How do you compute net worth? - ANSWER-assets- liabilities
What is a cash flow statement? - ANSWER-list income and expenses
What is the difference between a fixed expense and a variable expense? - ANSWER-
fixed- same every month variable- change every month
What is a closed-end mutual fund? an open-end mutual fund? - ANSWER-Closed:
shares are issued when it is created, open shares can be made when someone wants
one
What is net asset value? How is the net asset value calculated? - ANSWER-Value of
the mutual funds portfolio value of mutual funds in portfolio-liabilities / number of
outstanding shares. Calculated at the close of each day
What is a load fund? a no-load fund? - ANSWER-Load fund- you pay commission when
you purchase it no load fund- a mutal fund where there is not a sales charge
What is a contingent deferred sales load? - ANSWER-1-5% fee is paid sometimes
called a b fund you pay when you withdraw
How much can you expect to pay in management fees for most mutual funds? -
ANSWER-Usually .25-1.25% you will have to pay
What is a 12b-1 fee? - ANSWER-fee for marketing or distributing a mutual fund
What is expense ratio? - ANSWER-all the fees (desired 1% or less)
Why do investors purchase mutual funds? - ANSWER-Professional management 2.
Diversification
Is there a significant difference between the performance of a load fund and a no-load
fund? Explain. - ANSWER-No. They can both do the same
What do experts recommend investors look for in an expense ratio? - ANSWER-less
than 1%
What is an equity income fund? - ANSWER-invest in stocks with a company that will
pay dividends
What type of mutual fund would you recommend for an elderly person who is concerned
about the safety of his or her investment? - ANSWER-intermediate U.S. bonds
What is a growth fund? - ANSWER-one that invests in stocks that are growing rapidly
What is an asset allocation fund? - ANSWER-one that focuses on diversification
, What are index funds? How do their performance compare to managed funds? -
ANSWER-managed funds have a person managing it- index fund is based on numbers-
the indexed funds out perform the managed funds 85% of the time
How can an investor make money with mutual funds? - ANSWER-income dividends,
buy and sell for a higher price, from capital gain distributions
What is a "family of funds"? one investment company with a group of funds which you
can move from one to another without costing a lot of money - ANSWER-
How can you get information about various mutual funds? - ANSWER-internet, mutual
fund website, pay an advisory service
What mutual fund earnings are considered taxable income? - ANSWER-income
dividends, capital gain distributions and capital gains
What is the most popular method of purchasing open-end mutual funds? - ANSWER-
regular account transaction
What are the misconceptions about retirement planning? - ANSWER-having enough
money with social security alone, company pension will be enough, not many expenses
or how long they need it
What is a contractual savings plan? a voluntary savings plan? - ANSWER-making a
contract with a company that you are going to invest by making regular purchases over
a period of time voluntary- decide how much and when
How do wills and trusts help in planning your estate? - ANSWER-wills let people know
what you want trusts allow people to get money without going through probate court and
also bypass taxes
What are the important steps in retirement planning? - ANSWER-1. analyze current
assets and liabilities (health, clothing)
What are defined-contribution plans? What are defined-benefit plans? - ANSWER-
Defined contribution - 401-k benefit- contract saying what theyll give you
What is a will? notes of a persons mind as to how their property will be distributes -
ANSWER-
Define the following wills: simple, traditional marriage share, exemption trust, stated
amount, formal will, holographic, statutory. - ANSWER-simple- all to the spouse,
traditional- marriage 50% to spouse and rest to others, exemption some to people some
to trust, stated amout telling where everyone gets stuff, formal will- with a lawyer , safe,
hollographic- may not be legal can be contested hand-written, statutroy- usuing a form
off the internet
What does it mean to be intestate? - ANSWER-died without a will
What is a codicil? adding an ammendment - ANSWER-
Define types of trusts: revocable, irrevocable, credit-shelter, disclaimer, living,
testamentary - ANSWER-revocable v. irrevocable- changing it ,credit-shelter- common
everything transfers for spouse disclaimer- disclaim some, living- you set up while youre
alive to see how money is managed, testamentary- goes into effect when dead
What does the term liquidity mean? - ANSWER-covert it to cash
How do you compute net worth? - ANSWER-assets- liabilities
What is a cash flow statement? - ANSWER-list income and expenses
What is the difference between a fixed expense and a variable expense? - ANSWER-
fixed- same every month variable- change every month
