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Funds 108: Introduction to Mutual Fund Prospectuses

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1.
The mutual fund shareholder manual explains how to open a mutual fund account.
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True. That is one of its most basic services.
2.
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.
3.
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.
4.
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.
5.
Which of the following is not a transaction fee?
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Management fee. This fee is an operating expense. It is not related to trading.
6.
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.