Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
A 12b-1 fee is used to offset reduced sales charges and to cover some of the administrative costs of a mutual fund.
True. A 12b-1 fee, which is assessed annually, is based on the fund's total net asset value, and is used to offset reduced sales charges and to cover some of the administrative costs of the fund.
2.
A growth or aggressive-growth mutual fund typically invests almost entirely for _______.
Capital appreciation. The growth or aggressive-growth fund typically invests almost entirely for capital appreciation despite that the road to long-term growth is paved with short-term risks and possible losses in principal.
3.
Which of the following is not considered when deciding whether or not to reallocate assets using active allocation?
The Dow Jones Industrial Average. While the Dow can influence investor decisions, its daily performance is too universal to have any meaningful effect on an individual portfolio. Instead, investors should look to such benchmarks as the price, volatility, and performance of their portfolios, as well as interest rates and changes in management of their funds.
4.
Mutual funds are a poor choice with which to attempt asset allocation.
False. One of the best ways to diversify a given sum of money is to invest it into one or more mutual funds.
5.
An asset allocation mutual fund spreads its portfolio among only a handful of investments.
False. An asset allocation mutual fund spreads its portfolio among a wide variety of investments, including domestic and foreign stocks and bonds, government securities, cash, gold, and real estate stocks.
