#1
What is a mutual fund?
An investment vehicle that pools money from multiple investors to invest in securities
ExplanationPooled investment vehicle diversifying funds in securities.
#2
Which of the following is NOT a type of mutual fund?
Fixed deposit fund
ExplanationExcludes fixed deposit fund from mutual fund types.
#3
What is the primary advantage of investing in a mutual fund?
Diversification
ExplanationInvestment advantage through diversification.
#4
What is a load in mutual fund terminology?
A fee charged to investors when they buy or sell shares of a mutual fund
ExplanationInvestor fee for buying or selling mutual fund shares.
#5
What is a balanced mutual fund?
A fund that invests in a mix of stocks and bonds to provide both growth and income
ExplanationBalanced fund: invests in stocks and bonds for growth and income.
#6
What is the purpose of a mutual fund prospectus?
All of the above
ExplanationProspectus purpose: comprehensive information for investors.
#7
What is the concept of 'asset allocation' in mutual fund investing?
The process of diversifying investments across different asset classes
ExplanationAsset allocation: diversifying across different asset classes.
#8
What is the Net Asset Value (NAV) of a mutual fund?
The total value of all the securities in the fund divided by the number of shares outstanding
ExplanationTotal fund securities value divided by outstanding shares.
#9
What does the expense ratio of a mutual fund indicate?
The percentage of assets deducted annually to cover fund expenses
ExplanationAnnual percentage of assets deducted for fund expenses.
#10
Which of the following investment strategies is typically associated with a growth mutual fund?
Investing in high-growth companies with potential for capital appreciation
ExplanationGrowth fund strategy: investing in high-growth companies.
#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
ExplanationOpen-end funds issue unlimited shares, closed-end funds have a fixed number.
#12
What is an exchange-traded fund (ETF)?
A type of mutual fund that trades on stock exchanges
ExplanationETF: trades on stock exchanges, a type of mutual fund.
#13
What does the term 'benchmark' refer to in the context of mutual funds?
The average performance of similar funds in the market
ExplanationBenchmark: average performance of similar market funds.
#14
Which of the following is true about a no-load mutual fund?
It does not charge any fees to investors
ExplanationNo-load fund: no fees charged to investors.
#15
Which regulatory body oversees mutual funds in the United States?
Securities and Exchange Commission (SEC)
ExplanationSEC oversees mutual funds in the United States.
#16
What is a 12b-1 fee in the context of mutual funds?
A fee charged to investors for marketing and distribution expenses
ExplanationInvestor fee for marketing and distribution expenses.
#17
What is a sector mutual fund?
A fund that invests in a specific industry or sector of the economy
ExplanationSector fund: invests in a specific industry or sector.
#18
What does the Sharpe ratio measure in the context of mutual funds?
The fund's risk-adjusted return
ExplanationSharpe ratio: measures fund's risk-adjusted return.
#19
What is a 'no-transaction-fee (NTF) fund'?
A fund that allows investors to buy and sell shares without incurring a transaction fee
ExplanationNTF fund: allows buying and selling without transaction fees.