18 Questions
What percentage of mutual funds accounts combine stocks and bonds into a single fund?
5%
What is the main characteristic of an open-end fund that invests only in money market securities?
Offers check-writing privileges
What type of mutual fund accounts for the largest percentage of net assets?
Stock (equity) funds
What is the primary benefit of an index fund compared to traditional mutual funds?
Lower fees
What is the approximate percentage of net assets accounted for by hybrid funds?
8%
What type of mutual fund can fit into any category discussed?
Index fund
What is a benefit of mutual funds in terms of liquidity?
Quick conversion of investments to cash
What is a benefit of mutual funds in terms of denomination?
Allowing investors to participate in equity and debt offerings with smaller amounts
What is an advantage of mutual funds in terms of costs?
Negotiating lower transaction fees due to economies of scale
What is a benefit of mutual funds in terms of managerial expertise?
Providing access to professional money managers
What percentage of households held mutual fund shares in 1980?
5.7%
What is the estimated size of the retirement market that mutual funds account for?
$5.3 trillion
What type of shares do not charge an upfront fee for buying the shares?
No-load shares
What is the primary purpose of the 12b-1 fee in mutual funds?
To pay for marketing and advertising expenses
What is the main difference between hedge funds and mutual funds in terms of their board composition?
Hedge funds have more independent directors
What is the purpose of the contingent deferred sales charge in mutual funds?
To charge a fee when shares are redeemed
What is the main purpose of the Investment Company Act of 1940?
To require registration and minimum operational standards for mutual funds
What is the characteristic of special mutual funds that received great attention after the collapse of Long-Term Capital Management?
High minimum investment requirement
Test your knowledge of the benefits of mutual funds, including liquidity, denomination, diversification, cost advantages, and managerial expertise. Learn how mutual funds can help investors achieve their financial goals. Assess your understanding of the advantages of investing in mutual funds.
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