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The Ultimate Mutual Funds Quiz
by Staff
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?

  • investment diversity
  • 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?

  • two
  • three
  • five

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.