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Funds 108: Introduction to Mutual Fund Prospectuses

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1.
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.
2.
A mutual fund shareholder manual does all of the following except explain how _______.
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Taxes apply. The shareholder manual explains share price, redemption, and adding to your account.
3.
One reason prospectuses use technical and precise language is to protect the consumer.
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True. This language makes it harder to misinterpret what is in a document.
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.
Transaction fees cover buying and selling costs of securities within a mutual fund.
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True. Transacting is essentially buying and selling portfolio securities.
6.
An objective may include a statement of the level of share-price stability it seeks.
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True. Stability is often a strategy for achieving an objective.