Choose wisely. There is only one correct answer to each question.
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1.
How do you calculate a fund's asset size?
Multiply the fund's net asset value by the number of shares outstanding. This is how you determine the asset size.
2.
If you're a mutual fund investor concerned about asset growth, what should you do?
Favor funds with low turnover rates. The less a fund trades, the lower its trading cost. Aggressive, fast-trading funds will only be hurt more by asset growth. And by avoiding all small-company funds, you're missing out on a large part of the market.
3.
Which type of fund tends to be the most threatened by asset growth?
High-turnover small-growth funds. Because large-cap stocks are more liquid and account for the lion's share of the market's value, funds that focus on such names tend to be less affected by size than smaller-cap-focused funds. Low-turnover funds incur lower trading costs and are more affected by asset growth than fast-trading ones.
4.
Once a fund closes, it does not take in any more investments from existing shareholders.
False. Many funds do actually continue to take in new investments from their existing shareholders after they close.
5.
Due to their sheer size, large funds tend to be the most threatened by asset growth.
False. Because large-cap stocks account for the lion's share of the market's value, funds that focus on such names tend to be less affected by size than smaller-cap-focused funds.
