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TUTORIAL 12

MUTUAL FUNDS: PROFESSIONALLY MANAGED PORTFOLIO

1) Which of the following characteristics apply to closed-end mutual funds?

I. unlimited number of outstanding shares

II. transactions between shareholdersIII. market prices may be higher or lower than NAV

IV. fund repurchase of shares at any time

A) I and IV only

B) II and III only

C) I, II and III only

D) II, III and IV only

2) Which of the following characteristics apply to exchange traded funds (ETF's)?

I. unlimited number of outstanding shares

II. typically track the performance of some indexIII. market prices may be higher or lower than NAV

IV. may invest in the whole index or use a sample of securities to track the index as

closely as possible

A) I and II only

B) II and III only

C) I, II and III only

D) I, II, and IV only

3) Back-end loads

A) are charged when an investor buys their mutual fund shares.

B) are charged if an investor sells his or her shares within the first few years.

C) were designed to help no-load funds cover their marketing expenses.

D) encourage short-term trading.

4) A type of fund that invests in real estate and/or mortgages is known as a

A) REIT.

B) ETF.

C) sector fund.

D) hedge fund.

5)Investors in hedge funds have the legal status of

A) shareholders.

B) limited partners.

C) general partners.

D) trustees.

6) An aggressive growth mutual fund is least likely to purchase a stock

A) with a high P/E ratio.

B) with a high anticipated rate of growth.

C) of an well-established firm.

D) with a high dividend yield 

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DII5018-INTRODUCTION TO INVESTMENT

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7) Which type of mutual fund consists of both stocks and bonds with a combined

objective of current income and long-term capital gains?

A) equity-income

B) balanced

C) value

D) bond

8) One type of mutual fund spreads investors' money across equity markets, bond

markets, and money markets. Moreover, as market conditions change, the amount of

money invested in each market sector will change. This type of mutual fund is known

as a(n)

A) socially responsible fund.

B) fiscally responsible fund.

C) growth-and-income fund.

D) asset allocation fund.

9) The ability to automatically buy additional fund shares using the dividend incomegenerated by the fund is called a(n)

A) automatic investment plan.

B) automatic reinvestment plan.

C) systematic withdrawal plan.

D) conversion plan.

10) Income from ________ is exempt from federal income taxes.

A) money market funds

B) municipal bond funds

C) government bond funds

D) REITs