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Funds 101: Mutual Fund Basics

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1.
The holdings and sectors within a mutual fund always rise and fall together.
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False. Due to the diversification of mutual fund holdings, some positions may be positive while others may not be.
2.
In the world of mutual funds, what are outstanding shares?
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Shares owned by the public. To be "outstanding" is to be in the public's possession.
3.
A mutual fund is a(n) _______.
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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.
4.
Diversification spreads risk among several different investments.
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True. Each investment has its own risk profile.
5.
Which party hands out dividends to mutual fund investors?
Choose wisely. There is only one correct answer.
The transfer agent. If you chose "distributor," remember that this party distributes shares, not dividends.