Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
It is possible to buy shares of a mutual fund directly from the fund instead of through a broker.
True. Although you can buy shares through a broker, most funds also let you buy shares directly from the funds themselves.
2.
If you buy mutual fund shares from another investor instead of from the fund itself, you are buying _______ shares.
Closed-end. Closed-end fund shares are traded between investors and cannot be bought from the fund itself, except when it sells shares for the very first time.
3.
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.
4.
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.
5.
Which party hands out dividends to mutual fund investors?
The transfer agent. If you chose "distributor," remember that this party distributes shares, not dividends.
