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Funds 108: Introduction to Mutual Fund Prospectuses

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1.
A mutual fund objective may include a statement of the level of income it seeks.
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True. This is one of the most important parts of the objective.
2.
Transaction fees cover buying and selling costs of securities within a mutual fund.
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True. Transacting is essentially buying and selling portfolio securities.
3.
Which party hands out dividends to mutual fund investors?
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The transfer agent. If you chose "distributor," remember that this party distributes shares, not dividends.
4.
Which of the following is not covered under a prospectus' section on performance?
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Risks. The "Performance" section deals with objective data.
5.
To promote a mutual fund, a prospectus could legally include information about why you should invest in the fund.
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False. Prospectuses are forbidden to make any sales recommendations.
6.
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.