Mutual Fund Concepts

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Take this test on mutual funds concepts to assess your knowledge about mutual funds.

The term, EXCESS, returns is commonly defined as

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total portfolio returns minus the market rate.

total portfolio returns minus the risk-free rate.

(portfolio returns minus the risk-free rate)/beta.

none of the above.

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Which type of fund is most likely to have the lowest management fee?

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Equity growth fund.

Bond fund.

Index fund.

Equity income fund.

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You are evaluating a fund. What activity would you typically not undertake in this effort?

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Calculate the fund's NAV.

Calculate or find the fund's rate of return.

Review the fund's turnover ratio

Administrative expenses-to-assets ratio.

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Which portfolio of mutual funds would be most appropriate for an aggressive investor?

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One divided equally among large company, small company, and international stocks.

One with 40 % invested in 3-5 year CDs, 30% in large company growth stocks, and 30% in 10-20 year U.S. Treasury strips.

One equally weighted among small company stocks and high quality corporate bonds.

offer considerable safety but pay rather meager dividends.

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The least risk exposure would be appropriate for a mutual fund which

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is oriented toward capital gains for wealthy investors.

is designed for young, upwardly mobile professionals.

generates income for investors living on a fixed income.

none of the above.

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A diversified equity fund is one which

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Invests in one sector

Invests in one theme

Invests in minimum 30 stocks

Invests in stocks across various sectors

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If you would like to invest in the software industry, you should look for

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hedge fund.

an index fund.

a sector fund.

a balanced fund.

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Closed-end funds have lower cash requirements than open-end funds because:

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open-end funds pay more taxes than closed-end funds.

open-end funds allow investors to redeem their shares at any time.

closed-end funds have limited lifetimes.

open-end funds tend to invest in less liquid assets.

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Which type of fund invests in debt securities with very short maturities?

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Growth fund.

Bond fund.

Money market mutual fund.

Certified fund.

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A major difference between load and no-load funds is

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marketability: no-load funds can be traded more readily.

acquisition cost: load funds cost more than their NAVs.

performance: load funds do better.

fund: open ended.

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