Understanding Mutual Funds

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Questions and Answers

What is a mutual fund?

A government-issued investment bond
An insurance product for retirement savings
A vehicle that pools contributions from investors and invests in various securities (correct)
A type of bank account for individual investors

How do individuals who contribute to a mutual fund benefit?

They receive fixed interest payments regardless of the fund's performance
They have no direct benefits from contributing to the fund
They share in the income, gains, losses, and expenses of the fund based on the number of units or shares they own (correct)
They receive tax deductions for their contributions

How are mutual funds managed?

By volunteer investors
By individual contributors to the fund
By professional money managers according to the fund's policies and objectives (correct)
By government officials

What has been the trend in the Canadian mutual fund industry?

Tremendous growth in both product choices and assets under management (D) Signup and view all the answers

Are mutual funds suitable for all investors?

No, there is no one perfect investment that suits all investors; however, mutual funds have become important investment products for many investors (C) Signup and view all the answers

What types of securities can a mutual fund invest in?

Stocks, bonds, and money market instruments (B) Signup and view all the answers

How do individuals who contribute to a mutual fund benefit?

They share in the income, gains, losses, and expenses of the fund based on the number of units or shares they own (B) Signup and view all the answers

Who manages the assets of a mutual fund?

Professional money managers (B) Signup and view all the answers

What has been the trend in the Canadian mutual fund industry?

Tremendous growth in choice of products available to investors and in the dollar value of assets under management (B) Signup and view all the answers

Are mutual funds a simple investment vehicle?

No, they are complex investment vehicles available in a variety of different forms and through different distribution channels (C) Signup and view all the answers