#1
What is a mutual fund?
A type of stock exchange
An investment vehicle that pools money from multiple investors to invest in securities
A type of insurance policy
A government-regulated bank account
#2
Which of the following is NOT a type of mutual fund?
Index fund
Equity fund
Fixed deposit fund
Bond fund
#3
What is the primary advantage of investing in a mutual fund?
High liquidity
Diversification
Guaranteed returns
Tax exemption
#4
What is a load in mutual fund terminology?
A fee charged to investors when they buy or sell shares of a mutual fund
The profit earned by the mutual fund
The total assets under management
The net asset value of the mutual fund
#5
What is a balanced mutual fund?
A fund that invests only in stocks
A fund that invests only in bonds
A fund that invests in a mix of stocks and bonds to provide both growth and income
A fund that invests in precious metals
#6
What is the purpose of a mutual fund prospectus?
To outline the fund's investment strategy and objectives
To provide information on the fund's past performance
To disclose fees and expenses associated with the fund
All of the above
#7
What is the concept of 'asset allocation' in mutual fund investing?
The process of selecting specific securities to invest in
The process of diversifying investments across different asset classes
The process of timing the market to maximize returns
The process of managing the fund's expenses
#8
What is the Net Asset Value (NAV) of a mutual fund?
The total assets minus total liabilities
The price per share of the fund
The total value of all the securities in the fund divided by the number of shares outstanding
The total profit earned by the mutual fund
#9
What does the expense ratio of a mutual fund indicate?
The percentage of returns that go to the fund manager
The fee charged to investors for managing the fund
The percentage of assets deducted annually to cover fund expenses
The total assets under management
#10
Which of the following investment strategies is typically associated with a growth mutual fund?
Investing in stable and mature companies
Seeking undervalued stocks
Investing in high-growth companies with potential for capital appreciation
Investing primarily in government bonds
#11
What is the difference between an open-end mutual fund and a closed-end mutual fund?
Open-end funds can issue unlimited shares, while closed-end funds have a fixed number of shares
Open-end funds have a fixed number of shares, while closed-end funds can issue unlimited shares
Open-end funds can trade on stock exchanges, while closed-end funds cannot
Closed-end funds are more liquid than open-end funds
#12
What is an exchange-traded fund (ETF)?
A type of mutual fund that trades on stock exchanges
A type of savings account offered by banks
A type of retirement plan
A type of insurance policy
#13
What does the term 'benchmark' refer to in the context of mutual funds?
The highest performing fund in a particular category
The average performance of similar funds in the market
The minimum return guaranteed by the fund manager
The fee charged by the fund manager
#14
Which of the following is true about a no-load mutual fund?
It does not charge any fees to investors
It has a higher expense ratio compared to load funds
It guarantees a fixed return to investors
It primarily invests in speculative assets
#15
Which regulatory body oversees mutual funds in the United States?
Securities and Exchange Commission (SEC)
Federal Reserve System (Fed)
Commodity Futures Trading Commission (CFTC)
Financial Industry Regulatory Authority (FINRA)
#16
What is a 12b-1 fee in the context of mutual funds?
A fee charged by the fund manager for administrative expenses
A fee paid to the investment advisor for managing the fund
A fee charged to investors for marketing and distribution expenses
A fee deducted from the fund's total assets for shareholder servicing
#17
What is a sector mutual fund?
A fund that invests in a specific industry or sector of the economy
A fund that invests only in government bonds
A fund that invests in foreign stocks
A fund that invests in emerging markets
#18
What does the Sharpe ratio measure in the context of mutual funds?
The fund's performance relative to a benchmark index
The fund's risk-adjusted return
The fund's turnover ratio
The fund's liquidity
#19
What is a 'no-transaction-fee (NTF) fund'?
A fund that does not charge any fees to investors
A fund that charges a fee for every transaction made by the investor
A fund that allows investors to buy and sell shares without incurring a transaction fee
A fund that guarantees a fixed return to investors