Do you know all there is to know about mutual funds? If you have a 401(k) you probably already own shares in one or more mutual funds. In fact, many long-term investments like college savings plans invest your money in mutual funds. Take this quiz to see what you know about mutual funds.
What is a mutual fund?
A mutual fund is actually a low risk hedge fund.
A mutual fund is a large insurance company with shareholders.
A mutual fund is a company that pools investors’ money to create an investment portfolio.
How is a typical mutual fund managed in order to insure the best return on investment?
Mutual funds are managed based on co-operative decisions made at quarterly shareholder meetings.
A professional investment manager manages a mutual fund on behalf of the investors.
A Certified Financial Planner is responsible to manage all aspects of any mutual fund.
What happens to your shares in a mutual fund if the fund suffers losses?
With a mutual fund, your investment is insured against any losses.
Mutual funds historically have never incurred losses because they are diverse.
If the mutual fund suffers any losses, your shares will decrease proportionally.
What is an advantage that mutual funds enjoy over other types of investment vehicles?
low initial cost to participate
managed by majority vote
How can you be sure that any given mutual fund manager will take care of your best interests when you invest?
The U.S. Securities and Exchange Commission (SEC) holds mutual fund managers accountable for fund performance.
The National Association of Professional Fund Managers must license all professional fund managers.
The mutual fund managers’ compensation is based on performance of the mutual funds managed.
What is an open-end mutual fund?
As a fund shareholder, you are free to buy or sell shares in the fund at any time.
As a fund shareholder, you are limited to buying or selling shares in the fund during open periods.
As a fund shareholder, you can only market shares in the fund when it opens or ends its designated term.
If you invest in a closed-end mutual fund and you want to divest some of the shares, are there restrictions?
You have no choice but to hold your shares until the mutual fund terminates.
You can sell your shares only to other investors in the same mutual fund.
You can sell your shares only to other investors on the secondary market.
When discussing mutual funds, what does load charge mean?
Load charge is a tax that is used to fund oversight of mutual funds by the SEC.
Load charge refers to the price of each share in a mutual fund after a sales charge has been added.
Load charge refers to an ongoing management fee shared by all shareholders of a mutual fund.
How many mutual fund categories are there?
What is a convenient way to buy no-load mutual funds?
No-load funds may be purchased directly from mutual fund companies online.
No-load funds may be purchased from any commercial banks.
No-load funds may be purchased directly from any stockbroker.