HS 328 - Lesson 8 Exam Questions With 100%
Correct Answers
As of the end of 2017, there was more than $18 trillion invested in investment
companies.
a. True
b. False - ANSWER a. True
The largest percentage of investment company assets are invested in ETFs.
a. True
b. False - ANSWER b. False
Explanation: The largest percentage of investment company assets are invested in
mutual funds.
Most investment companies are structured in such a way as to be nontaxabl entities.
a. True
b. False - ANSWER a. True
UITs often make a public offering twice per year for each fund.
a. True
b. False - ANSWER b. False
Explanation: A UIT usually has only one initial public offering.
UITs are generally passively managed.
a. True
b. False - ANSWER a. True
Municipal bond UITs pay out interest and principal as it is received.
a. True
b. False - ANSWER a. True
ETF shares can only be sold at the end of the trading day.
a. True
,b. False - ANSWER b. False
Explanation: ETF shares can be sold anytime during the trading day.
ETFs are generally actively managed.
a. True
b. False - ANSWER b. False
Explanation: ETFs are generally passively managed but some are actively managed.
One of the advantages of ETFs is the low expense ratios for these funds.
a. True
b. False - ANSWER a. True
ETFs could be used to build a diversified portfolio.
a. True
b. False - ANSWER a. True
A closed-end mutual fund rarely trades at NAV.
a. True
b. False - ANSWER a. True
There are far more open-end than closed-end mutual funds.
a. True
b. False - ANSWER a. True
Shares for both ETFs and closed-end funds are traded on the secondary exchange.
a. True
b. False - ANSWER a. True
Front-loads reduce the amount invested.
a. True
b. False - ANSWER a. True
12b-1 fees are applied annually, if at all.
a. True
b. False - ANSWER a. True
, An international equity fund will likely have a higher expense ratio than a domestic
money market fund.
a. True
b. False - ANSWER a. True
A 1% difference in expense ratio can produce substantial difference in overall
performance over a long period.
a. True
b. False - ANSWER a. True
A shares are the cheapest in the long run for loaded shares.
a. True
b. False - ANSWER a. True
B shares revert to A shares after a number of years.
a. True
b. False - ANSWER a. True
Most mutual funds require a minimum investment of at least $10,000.
a. True
b. False - ANSWER b. False
Explanation: Most have a minimum of $1,000 or less. Some even have zero minimums.
Mutual funds are one of the most efficient ways t achieve diversification with a relatively
small investment.
Correct Answers
As of the end of 2017, there was more than $18 trillion invested in investment
companies.
a. True
b. False - ANSWER a. True
The largest percentage of investment company assets are invested in ETFs.
a. True
b. False - ANSWER b. False
Explanation: The largest percentage of investment company assets are invested in
mutual funds.
Most investment companies are structured in such a way as to be nontaxabl entities.
a. True
b. False - ANSWER a. True
UITs often make a public offering twice per year for each fund.
a. True
b. False - ANSWER b. False
Explanation: A UIT usually has only one initial public offering.
UITs are generally passively managed.
a. True
b. False - ANSWER a. True
Municipal bond UITs pay out interest and principal as it is received.
a. True
b. False - ANSWER a. True
ETF shares can only be sold at the end of the trading day.
a. True
,b. False - ANSWER b. False
Explanation: ETF shares can be sold anytime during the trading day.
ETFs are generally actively managed.
a. True
b. False - ANSWER b. False
Explanation: ETFs are generally passively managed but some are actively managed.
One of the advantages of ETFs is the low expense ratios for these funds.
a. True
b. False - ANSWER a. True
ETFs could be used to build a diversified portfolio.
a. True
b. False - ANSWER a. True
A closed-end mutual fund rarely trades at NAV.
a. True
b. False - ANSWER a. True
There are far more open-end than closed-end mutual funds.
a. True
b. False - ANSWER a. True
Shares for both ETFs and closed-end funds are traded on the secondary exchange.
a. True
b. False - ANSWER a. True
Front-loads reduce the amount invested.
a. True
b. False - ANSWER a. True
12b-1 fees are applied annually, if at all.
a. True
b. False - ANSWER a. True
, An international equity fund will likely have a higher expense ratio than a domestic
money market fund.
a. True
b. False - ANSWER a. True
A 1% difference in expense ratio can produce substantial difference in overall
performance over a long period.
a. True
b. False - ANSWER a. True
A shares are the cheapest in the long run for loaded shares.
a. True
b. False - ANSWER a. True
B shares revert to A shares after a number of years.
a. True
b. False - ANSWER a. True
Most mutual funds require a minimum investment of at least $10,000.
a. True
b. False - ANSWER b. False
Explanation: Most have a minimum of $1,000 or less. Some even have zero minimums.
Mutual funds are one of the most efficient ways t achieve diversification with a relatively
small investment.
