FCS 340 Final Exam | Actual Exam Questions |
100% Correct Answers | Verified 2024 Version
What is a closed-end mutual fund? What is an open-end mutual fund? - ✔✔
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? - ✔✔value of a mutual fund / at the
end of every day
What is a load fund? What is a no-load fund? - ✔✔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? - ✔✔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? - ✔✔Between .25-1.5% of
the fund's net asset value
What is a 12b-1 fee? - ✔✔Fee that an investment company pays to avoid the costs of advertising and
marketing a mutual fund
What is expense ratio? - ✔✔Amount investors pay for all of a mutual fund's management fees and
operating fees
Why do investors purchase mutual funds? - ✔✔diversification and professional management
Is there any significant differences between the performance of a load fund and a no-load fund? Explain.
- ✔✔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? - ✔✔Less than 1%
What is an equity income fund? - ✔✔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? -
✔✔Intermediate US bond fund
What is a growth fund? - ✔✔investment in company expecting higher than average revenue and earn
growth (tend to invest in large)
What is an asset allocation fund? - ✔✔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? - ✔✔- 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? - ✔✔shares in a fund are sold; the profit from the
increase in value is called capital gain
What is a "family of funds"? - ✔✔Group of mutual funds managed by an investment company
How can you get information about various mutual funds? - ✔✔internet, mutual fund websites, and
advisory services (but you have to pay for those)
What mutual fund earnings are considered taxable income? - ✔✔income dividends
What is the most popular method of purchasing open-end mutual funds? - ✔✔through a regular
account transaction
100% Correct Answers | Verified 2024 Version
What is a closed-end mutual fund? What is an open-end mutual fund? - ✔✔
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? - ✔✔value of a mutual fund / at the
end of every day
What is a load fund? What is a no-load fund? - ✔✔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? - ✔✔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? - ✔✔Between .25-1.5% of
the fund's net asset value
What is a 12b-1 fee? - ✔✔Fee that an investment company pays to avoid the costs of advertising and
marketing a mutual fund
What is expense ratio? - ✔✔Amount investors pay for all of a mutual fund's management fees and
operating fees
Why do investors purchase mutual funds? - ✔✔diversification and professional management
Is there any significant differences between the performance of a load fund and a no-load fund? Explain.
- ✔✔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? - ✔✔Less than 1%
What is an equity income fund? - ✔✔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? -
✔✔Intermediate US bond fund
What is a growth fund? - ✔✔investment in company expecting higher than average revenue and earn
growth (tend to invest in large)
What is an asset allocation fund? - ✔✔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? - ✔✔- 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? - ✔✔shares in a fund are sold; the profit from the
increase in value is called capital gain
What is a "family of funds"? - ✔✔Group of mutual funds managed by an investment company
How can you get information about various mutual funds? - ✔✔internet, mutual fund websites, and
advisory services (but you have to pay for those)
What mutual fund earnings are considered taxable income? - ✔✔income dividends
What is the most popular method of purchasing open-end mutual funds? - ✔✔through a regular
account transaction
