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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.
Transaction fees cover buying and selling costs of securities within a mutual fund.
Choose wisely. There is only one correct answer.
True
False
True. Transacting is essentially buying and selling portfolio securities.
2.
What does the section on the fund's objectives tell the investor?
Choose wisely. There is only one correct answer.
The fund's strategies
The fund's philosophy
What it wishes to gain for its shareholders
All of the above
All of the above. The "Objectives" section includes strategies, philosophy, and objectives.
3.
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.
4.
Which party hands out dividends to mutual fund investors?
Choose wisely. There is only one correct answer.
The distributor
The transfer agent
The board of directors
The advisor
The transfer agent. If you chose "distributor," remember that this party distributes shares, not dividends.
5.
To promote a mutual fund, a prospectus could legally include information about why you should invest in the fund.
Choose wisely. There is only one correct answer.
True
False
False. Prospectuses are forbidden to make any sales recommendations.
6.
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.
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DONE