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18 Questions

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Mutual Funds Benefits

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Questions and Answers

What percentage of mutual funds accounts combine stocks and bonds into a single fund?

10%

15%

5% (correct)

20%

What is the main characteristic of an open-end fund that invests only in money market securities?

Offers higher returns than bank deposits

Contains a mix of stocks and bonds

Offers check-writing privileges (correct)

Is federally insured

What type of mutual fund accounts for the largest percentage of net assets?

Stock (equity) funds (correct)

Money market funds

Bond funds

Hybrid funds

What is the primary benefit of an index fund compared to traditional mutual funds?

Lower fees Signup and view all the answers

What is the approximate percentage of net assets accounted for by hybrid funds?

8% Signup and view all the answers

What type of mutual fund can fit into any category discussed?

Index fund Signup and view all the answers

What is a benefit of mutual funds in terms of liquidity?

Quick conversion of investments to cash Signup and view all the answers

What is a benefit of mutual funds in terms of denomination?

Allowing investors to participate in equity and debt offerings with smaller amounts Signup and view all the answers

What is an advantage of mutual funds in terms of costs?

Negotiating lower transaction fees due to economies of scale Signup and view all the answers

What is a benefit of mutual funds in terms of managerial expertise?

Providing access to professional money managers Signup and view all the answers

What percentage of households held mutual fund shares in 1980?

5.7% Signup and view all the answers

What is the estimated size of the retirement market that mutual funds account for?

$5.3 trillion Signup and view all the answers

What type of shares do not charge an upfront fee for buying the shares?

No-load shares Signup and view all the answers

What is the primary purpose of the 12b-1 fee in mutual funds?

To pay for marketing and advertising expenses Signup and view all the answers

What is the main difference between hedge funds and mutual funds in terms of their board composition?

Hedge funds have more independent directors Signup and view all the answers

What is the purpose of the contingent deferred sales charge in mutual funds?

To charge a fee when shares are redeemed Signup and view all the answers

What is the main purpose of the Investment Company Act of 1940?

To require registration and minimum operational standards for mutual funds Signup and view all the answers

What is the characteristic of special mutual funds that received great attention after the collapse of Long-Term Capital Management?

High minimum investment requirement Signup and view all the answers