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100
Funds 108:
Introduction to Mutual Fund Prospectuses
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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Review your answers below to learn more.
1.
The mutual fund prospectus explains the risk of the mutual fund.
Choose wisely. There is only one correct answer.
True
False
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.
Choose wisely. There is only one correct answer.
True
False
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?
Choose wisely. There is only one correct answer.
Sales load
12b-1 fee
Exchange fee
Taxes
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.
Choose wisely. There is only one correct answer.
True
False
True. It may also be the transfer agent.
5.
A mutual fund shareholder manual does all of the following except explain how _______.
Choose wisely. There is only one correct answer.
Share prices are determined
To redeem shares
Taxes apply
To add to an existing account
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.
Choose wisely. There is only one correct answer.
True
False
True. Stability is often a strategy for achieving an objective.
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DONE