Chapter 13—Investing in Mutual Funds
76. Financial leverage is less of a factor in real estate investment returns than with other types of investments.
a.
True
b.
False
False
Moderate
77. Real estate depreciation is considered a tax shelter.
a.
True
b.
False
True
Easy
78. When evaluating a real estate investment, the main consideration is changes in the property value.
a.
True
b.
False
False
Challenging
79. Speculating in raw land is a low-risk investment approach.
a.
True
b.
False
Moderate
Chapter 13—Investing in Mutual Funds
80. The primary purpose of investing in income property is to produce an attractive annual cash flow.
a.
True
b.
False
True
Easy
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Bloom’s: Remembering
81. First-time real estate investors should consider investing in commercial properties.
a.
True
b.
False
False
Moderate
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Bloom’s: Understanding
82. Asset allocation funds invest entirely in U.S. and foreign stocks and bonds.
a.
True
b.
False
False
Moderate
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Bloom’s: Remembering
83. Another name for a mutual fund is
a.
a closed-end investment company.
b.
an open-end investment company.
c.
a mutual investment company.
d.
an open investment company.
e.
a closed investment company.
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Bloom’s: Remembering
Chapter 13—Investing in Mutual Funds
Easy
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Bloom’s: Remembering
84. A mutual fund allows investors to
a.
b.
c.
d.
e.
c
Moderate
PFIN.BILL.17.13-1 – LO: 13-1
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United States – KS – DISC: Investments
Bloom’s: Understanding
85. The current market value of all the securities a mutual fund owns is called the
a.
market value.
b.
par value.
c.
net asset value.
d.
book value.
e.
liquidation value.
c
Easy
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Bloom’s: Remembering
86. Investors tend to use mutual funds for which of the following reasons
a.
Diversification
b.
Professional management
c.
Financial returns
d.
Convenience
Chapter 13—Investing in Mutual Funds
e.
All of these
e
Easy
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Bloom’s: Remembering
87. A(n) ____ sells fund shares, either directly to the public or through certain authorized dealers.
a.
investment advisor
b.
custodian
c.
transfer agent
d.
distributor
e.
money manager
Moderate
PFIN.BILL.17.13-1 – LO: 13-1
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Bloom’s: Remembering
88. A(n) ____ actually runs the portfolio and makes the buy and sell decisions.
a.
transfer agent
b.
distributor
c.
management company
d.
investment advisor
e.
custodian
c
Moderate
PFIN.BILL.17.13-1 – LO: 13-1
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United States – KS – DISC: Investments
Bloom’s: Remembering
89. Closed-end investment companies are characterized by
a.
number of shares determined by demand.
b.
price based on net asset value per share.
c.
variable transaction costs.
Chapter 13—Investing in Mutual Funds
d.
availability for sale or purchase on security markets.
e.
value dependent on quantity of shares held.
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Bloom’s: Understanding
90. A closed-end investment company that invests in various types of real estate and mortgages is a
a.
hybrid real estate investment trust.
b.
blind pool syndicate.
c.
real estate general partnership.
d.
hybrid limited partnership.
e.
mortgage real estate investment trust.
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Bloom’s: Remembering
91. Which of the following combines the operating characteristics of an open-end fund with some of the trading
characteristics of a closed-end fund?
a.
Preferred fund
b.
Common fund
c.
Exchange-traded fund
d.
Net-asset fund
e.
Unit investment trust
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Bloom’s: Understanding
92. A mutual fund’s NAV is its
a.
normal average value.
b.
nationally advertized value.
Chapter 13—Investing in Mutual Funds
c.
noted assessment vision.
d.
net asset value.
e.
none of these.
Easy
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Bloom’s: Remembering
93. Which of the following are characteristic of exchange-traded mutual funds?
a.
Traded on listed exchanges
b.
Closed-end funds
c.
Generally organized as sector funds
d.
Actively managed funds
e.
All of these
a
Moderate
PFIN.BILL.17.13-2 – LO: 13-2
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Bloom’s: Understanding
94. What type of REIT is most attractive to income-oriented investors?
a.
Equity
b.
Mortgage
c.
Hybrid
d.
Unit trust
e.
Exchange-traded
Challenging
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Bloom’s: Applying
95. A mutual fund’s NAV is calculated
a.
annually.
Chapter 13—Investing in Mutual Funds
b.
monthly.
c.
at least once a day.
d.
hourly.
e.
none of these.
c
Easy
PFIN.BILL.17.13-2 – LO: 13-2
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United States – KS – DISC: Investments
Bloom’s: Remembering
96. Redeeming your mutual fund shares might result in a charge called
a.
a back-end load.
b.
a front-end load.
c.
a redemption tax.
d.
a management fee.
e.
none of these.
a
Challenging
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Bloom’s: Applying
97. A no-load fund has no
a.
sales charges.
b.
administrative charges.
c.
management charges.
d.
tax charges.
e.
12b-1 fees.
Easy
PFIN.BILL.17.13-2 – LO: 13-2
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Bloom’s: Remembering
98. An annual fee charged by some mutual funds to cover marketing and distribution expenses is the
Chapter 13—Investing in Mutual Funds
a.
management fee.
b.
back-end load.
c.
transaction fee.
d.
12b-1 fee.
e.
low-load.
Easy
PFIN.BILL.17.13-2 – LO: 13-2
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Bloom’s: Remembering
99. Both load and no-load funds will always charge a
a.
transaction fee.
b.
12b-1 fee.
c.
management fee.
d.
fee on the sale of the shares.
e.
redemption fee.
c
Easy
PFIN.BILL.17.13-2 – LO: 13-2
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United States – KS – DISC: Investments
Bloom’s: Remembering
100. A behavioral bias in mutual fund investing where investors view recent performance as overly indicative of a fund’s
future performance is known as
a.
disposition effect.
b.
narrow framing.
c.
representativeness.
d.
recency.
e.
none of these.
c
Challenging
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Bloom’s: Understanding
Chapter 13—Investing in Mutual Funds
101. In The Wall Street Journal‘s listing of mutual funds, an “r” after the mutual fund name and before the NAV means
that the particular mutual fund has a ____ associated with it.
a.
front-end load
b.
back-end load
c.
12b-1 fee
d.
management fee
e.
none of these
PFIN.BILL.17.13-2 – LO: 13-2
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Bloom’s: Remembering
102. In The Wall Street Journal‘s listing of mutual funds, a “t” after the mutual fund name and before the NAV means that
the particular mutual fund has a ____ associated with it.
a.
front-end load
b.
back-end load
c.
12b-1 fee
d.
management fee
e.
b and c
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Bloom’s: Remembering
103. In The Wall Street Journal‘s listing of mutual funds, a “p” after the mutual fund name and before the NAV means
that the particular mutual fund has a ____ associated with it.
a.
front-end load
b.
back-end load
c.
12b-1 fee
d.
management fee
e.
none of these
PFIN.BILL.17.13-2 – LO: 13-2
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United States – AK – DISC: Derivatives
104. The share price of a closed-end fund is determined by
a.
its NAV.
b.
fund fees.
c.
general supply-and-demand conditions.
d.
its management fee.
e.
a and c.
e
Moderate
PFIN.BILL.17.13-2 – LO: 13-2
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Bloom’s: Understanding
105. What would the NAV of an open-ended mutual fund priced at $10 be if the load is 4%?
a.
$10.40
b.
$10.00
c.
$9.60
d.
$9.40
e.
$9.20
c
Challenging
PFIN.BILL.17.13-2 – LO: 13-2
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Bloom’s: Evaluating
106. To be a true no-load fund, there can be a maximum ____ load and a maximum ____ 12(b)-1 fee.
a.
0%; 0.00%
b.
0%; 0.25%
c.
0%; 1.00%
d.
3%; 0.25%
e.
3%; 1.00%
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United States – KS – DISC: Investments
Bloom’s: Remembering
Chapter 13—Investing in Mutual Funds
107. The fund whose main objective is growth is known as a(n) ____ fund.
a.
balanced
b.
preferred stock
c.
money market
d.
index
e.
none of these
e
Moderate
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Bloom’s: Remembering
108. The fund whose main objective is to simply match the market known as a(n) ____ fund.
a.
balanced
b.
preferred stock
c.
money market
d.
index
e.
none of these
Moderate
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Bloom’s: Remembering
109. A(n) ____ fund is quite speculative.
a.
balanced
b.
growth
c.
equity income
d.
aggressive growth
e.
money market
Moderate
PFIN.BILL.17.13-3 – LO: 13-3
Bloom’s: Remembering
Chapter 13—Investing in Mutual Funds
110. A fund that invests only in a particular industry would be a ____ fund.
a.
money market
b.
maximum capital
c.
sector
d.
balanced
e.
bond
c
Moderate
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Bloom’s: Remembering
111. Which of the following bond mutual funds would provide tax-free income?
a.
Government bond fund
b.
Municipal bond fund
c.
Convertible bond fund
d.
Mortgage-backed bond fund
e.
All of these
Moderate
PFIN.BILL.17.13-3 – LO: 13-3
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Bloom’s: Applying
112. Socially responsible funds typically avoid investing in
a.
environmentally sound companies.
b.
alcohol and tobacco stocks.
c.
car companies that do not promote safety.
d.
fast food chains that sell meat.
e.
all of these.
Easy
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Understanding
Chapter 13—Investing in Mutual Funds
113. Index funds have provided competitive rates of return because
a.
their costs are lower than other stock funds.
b.
it is difficult to outperform the market.
c.
they have very low turnover rates.
d.
they are tax efficient.
e.
all of these.
e
Moderate
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Bloom’s: Understanding
114. A(n) ____ fund invests primarily in a portfolio of common stocks for the income they provide.
a.
balanced
b.
money market
c.
growth
d.
sector
e.
equity-income
e
Moderate
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Bloom’s: Understanding
115. A mutual fund with an objective of both growth and income is a(n)
a.
bond fund.
b.
equity-income fund.
c.
growth fund.
d.
sector fund.
e.
balanced fund.
e
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Bloom’s: Remembering
Chapter 13—Investing in Mutual Funds
116. A balanced fund that emphasizes growth in capital is called a(n)
a.
bond and preferred stock fund.
b.
diversified common stock fund.
c.
equity-income fund.
d.
money market fund.
e.
growth-and-income fund.
e
Moderate
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Bloom’s: Understanding
117. ____ would not be a reason for purchasing mutual funds.
a.
Diversification
b.
Professional management
c.
Tax advantage
d.
Financial return
e.
Convenience
c
Moderate
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Bloom’s: Understanding
118. Most mutual funds allow investors to participate in
a.
automatic reinvestment plans.
b.
automatic investment plans.
c.
DRIP plans.
d.
a and b.
e.
a and c.
Moderate
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Bloom’s: Understanding
Chapter 13—Investing in Mutual Funds
Moderate
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Bloom’s: Remembering
119. The major advantage of mutual funds to the small investor is
a.
diversification.
b.
professional management.
c.
low cost.
d.
convenience.
e.
liquidity.
a
Easy
PFIN.BILL.17.13-1 – LO: 13-1
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Bloom’s: Understanding
120. Which of the following is not a source of mutual fund returns?
a.
Dividend income
b.
Capital gains
c.
Changes in NAV
d.
Changes in IDB
e.
All of these are sources of mutual fund returns.
Moderate
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Bloom’s: Remembering
121. Mutual funds do not offer
a.
automatic reinvestment plans.
b.
guaranteed performance.
c.
regular income programs.
d.
conversion privileges.
e.
retirement plans.