HSRT TEST PREP EXAM 2026 CERTIFICATION
PREPARATION WORKBOOK PROBLEM SOLVING
MOCK TEST ITEMS COMPLETE SOLUTIONS
◉ What is the main purpose of a mutual fund? Answer: To pool
money from investors and invest in a diversified portfolio of
securities
◉ What type of investment company issues redeemable securities?
Answer: Open-end investment companies (mutual funds)
◉ Which type of investment company is actively traded on an
exchange? Answer: Closed-end investment company
◉ What is an ETF? Answer: An exchange-traded fund that trades like
a stock but represents a diversified portfolio
◉ What does NAV stand for? Answer: Net Asset Value
◉ How often is NAV calculated for a mutual fund? Answer: Once per
business day, typically at market close
,◉ What is a load in mutual fund terms? Answer: A sales charge on
mutual funds paid by the investor
◉ What is a no-load fund? Answer: A mutual fund with no sales
charge
◉ What is a front-end load? Answer: A sales charge applied at the
time of purchase
◉ What is an expense ratio? Answer: The percentage of assets used
to cover operating expenses in a mutual fund
◉ What is a 12b-1 fee? Answer: A fee for marketing and distribution
expenses of a mutual fund
◉ What does DPP stand for? Answer: Direct Participation Program
◉ What is the main purpose of a DPP? Answer: To pass income,
losses, and tax benefits directly to investors
◉ What is a REIT? Answer: A Real Estate Investment Trust that
invests in real estate or real estate mortgages
,◉ How are REITs typically taxed? Answer: They must distribute at
least 90% of income to avoid corporate tax
◉ What is a closed-end investment company? Answer: An
investment company that issues a fixed number of shares that trade
on an exchange
◉ What is the main difference between open-end and closed-end
investment companies? Answer: Open-end companies issue new
shares as investors buy, while closed-end companies have a fixed
number of shares
◉ Do UITs trade on the secondary market? Answer: No, they are
redeemable securities
◉ What is a money market fund? Answer: A type of mutual fund that
invests in short-term, high-quality debt securities
◉ What is the primary risk of a money market fund? Answer:
Inflation risk
◉ What type of mutual fund charges a higher 12b-1 fee? Answer:
Class C shares
, ◉ What is the minimum percent of assets a mutual fund must invest
in securities to maintain its status? Answer: 75%
◉ What is the maximum limit on a mutual fund's 12b-1 fee? Answer:
0.75% for no-load funds, up to 1% for load funds
◉ What is a growth fund? Answer: A mutual fund that primarily
seeks capital appreciation by investing in stocks
◉ What is a balanced fund? Answer: A mutual fund that includes a
mix of stocks and bonds
◉ What type of securities do municipal bond funds invest in?
Answer: Municipal bonds for tax-exempt income
◉ What does a high expense ratio indicate about a mutual fund?
Answer: It has higher operating expenses
◉ How is a mutual fund's NAV per share calculated? Answer: By
dividing total assets minus liabilities by the number of shares
outstanding
◉ What is a capital gain distribution in a mutual fund? Answer:
Profit from securities sold by the fund, distributed to shareholders
PREPARATION WORKBOOK PROBLEM SOLVING
MOCK TEST ITEMS COMPLETE SOLUTIONS
◉ What is the main purpose of a mutual fund? Answer: To pool
money from investors and invest in a diversified portfolio of
securities
◉ What type of investment company issues redeemable securities?
Answer: Open-end investment companies (mutual funds)
◉ Which type of investment company is actively traded on an
exchange? Answer: Closed-end investment company
◉ What is an ETF? Answer: An exchange-traded fund that trades like
a stock but represents a diversified portfolio
◉ What does NAV stand for? Answer: Net Asset Value
◉ How often is NAV calculated for a mutual fund? Answer: Once per
business day, typically at market close
,◉ What is a load in mutual fund terms? Answer: A sales charge on
mutual funds paid by the investor
◉ What is a no-load fund? Answer: A mutual fund with no sales
charge
◉ What is a front-end load? Answer: A sales charge applied at the
time of purchase
◉ What is an expense ratio? Answer: The percentage of assets used
to cover operating expenses in a mutual fund
◉ What is a 12b-1 fee? Answer: A fee for marketing and distribution
expenses of a mutual fund
◉ What does DPP stand for? Answer: Direct Participation Program
◉ What is the main purpose of a DPP? Answer: To pass income,
losses, and tax benefits directly to investors
◉ What is a REIT? Answer: A Real Estate Investment Trust that
invests in real estate or real estate mortgages
,◉ How are REITs typically taxed? Answer: They must distribute at
least 90% of income to avoid corporate tax
◉ What is a closed-end investment company? Answer: An
investment company that issues a fixed number of shares that trade
on an exchange
◉ What is the main difference between open-end and closed-end
investment companies? Answer: Open-end companies issue new
shares as investors buy, while closed-end companies have a fixed
number of shares
◉ Do UITs trade on the secondary market? Answer: No, they are
redeemable securities
◉ What is a money market fund? Answer: A type of mutual fund that
invests in short-term, high-quality debt securities
◉ What is the primary risk of a money market fund? Answer:
Inflation risk
◉ What type of mutual fund charges a higher 12b-1 fee? Answer:
Class C shares
, ◉ What is the minimum percent of assets a mutual fund must invest
in securities to maintain its status? Answer: 75%
◉ What is the maximum limit on a mutual fund's 12b-1 fee? Answer:
0.75% for no-load funds, up to 1% for load funds
◉ What is a growth fund? Answer: A mutual fund that primarily
seeks capital appreciation by investing in stocks
◉ What is a balanced fund? Answer: A mutual fund that includes a
mix of stocks and bonds
◉ What type of securities do municipal bond funds invest in?
Answer: Municipal bonds for tax-exempt income
◉ What does a high expense ratio indicate about a mutual fund?
Answer: It has higher operating expenses
◉ How is a mutual fund's NAV per share calculated? Answer: By
dividing total assets minus liabilities by the number of shares
outstanding
◉ What is a capital gain distribution in a mutual fund? Answer:
Profit from securities sold by the fund, distributed to shareholders
