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1.
Which party hands out dividends to mutual fund investors?
The transfer agent. If you chose "distributor," remember that this party distributes shares, not dividends.
2.
Mutual funds will require a minimum purchase amount; however, that minimum can be waived.
True. Some mutual funds will waive the minimum required investment amount for a number of different reasons, such as setting up an automatic investment plan with them. Refer to the fund's prospectus for additional details on such waivers.
3.
Diversification spreads risk among several different investments.
True. Each investment has its own risk profile.
4.
A mutual fund is a(n) _______.
Package of several types of securities. Although some mutual funds invest only in stocks or bonds, mutual funds as a whole are open to several types of securities.
5.
Which of the following does diversification do for a mutual fund?
Spread risk. By spreading risk among several items in a fund, you can reduce the damage that a downturn in a few of them can cause.
