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Funds 108: Introduction to Mutual Fund Prospectuses

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1.
The mutual fund prospectus explains the risk of the mutual fund.
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False. It explains the risks of the types of securities it holds, but it does not cover risks of the fund itself.
2.
One reason prospectuses use technical and precise language is to protect the consumer.
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True. This language makes it harder to misinterpret what is in a document.
3.
Which of the following is an operating expense in a mutual fund?
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12b-1 fee. Taxes are not operating expenses, and the other two are transaction fees.
4.
The mutual fund advisor may play additional roles besides that of advisor.
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True. It may also be the transfer agent.
5.
A mutual fund shareholder manual does all of the following except explain how _______.
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Taxes apply. The shareholder manual explains share price, redemption, and adding to your account.
6.
An objective may include a statement of the level of share-price stability it seeks.
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True. Stability is often a strategy for achieving an objective.