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Exam 13: Investing in Mutual Funds

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Question 31

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Which of the following statements is false?

A) Market timers charge 1½ percent to 3 percent of the dollar value of the funds they manage.
B) Early research indicates that market timers must be evaluated as a group.
C) Since market timers offer a relatively new service,it is hard to evaluate long-term performance.
D) The true test of market timers is the ability to increase the investor's return during good times and keep that return during bad times.
E) A market timer helps investors decide when to switch from one fund to another.

F) C) and E)
G) None of the above

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Question 32

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The diversification of mutual funds spells safety,because an occasional loss incurred with one investment is usually offset by gains from other investments.

A) True
B) False

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Question 33

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With a mutual fund you can diversify your holdings by buying a mutual fund that owns stock in hundreds of different companies.

The major reasons why investors purchase mutual funds are professional management and diversification.

A mutual fund that invests in investment grade corporate and government debt is called a(n) ____________ fund.

Typically,you must invest at least $1,000 to open a mutual fund account.

A redemption fee is a 1 to 6 percent charge that shareholders pay when they withdraw their investment from a mutual fund.

Last month Nissa Jacobson's divorce became final.As part of the settlement,she received $150,000.She would like to invest in mutual funds,but since she is 62 years old,she is concerned with the safety of her "nest egg." Which of the following mutual funds would you recommend?

Although mutual funds are popular among individual investors,most people do not use them as part of a registered retirement account.

Another name for a mutual fund that charges a contingent deferred sales load is a(n) ____________ fund.

A mutual fund is:

The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a

A no-load fund is a mutual fund in which no sales charge is paid by the individual investor to purchase shares.

In order to sell shares in a closed-end fund,an investor must wait until the investment company is ready to repurchase the investor's shares.

Exchange traded funds can be traded throughout the day at changing market prices.

The management fee for most mutual funds ranges between ____________ percent.

Which of the following publications does not provide readers with an annual survey of mutual funds?

The family of funds concept makes it convenient for shareholders to switch their investments among funds as different funds offer more potential.

The Jeremiah Wazan Enterprise Mutual Fund's portfolio is valued at $125,000,000.The fund has liabilities of $5,000,000,and the investment company sponsoring the fund has issued 2,000,000 shares.What is the fund's net asset value?

Mutual funds that apportion their investments among common stocks and bonds are referred to as segregated funds.