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Funds Beginner: Introduction to Mutual Funds

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1.
You can buy mutual fund shares directly from the mutual fund company.
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True. You can buy shares directly. This is one of the popular features of mutual funds.
2.
One reason bond mutual funds include bonds is for their _______.
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Income. Bonds provide their owners with current, steady income. That is one reason bond funds include them.
3.
_______ are the earnings on a mutual fund's holdings that are distributed to shareholders.
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Dividends. Dividends are shareholders' shares of earnings.
4.
Common stocks are chosen by stock mutual funds because they have potential for growth.
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True. Of the two types of stock, common and preferred, common stocks provide the opportunity for growth.
5.
Index mutual funds achieve their objectives by matching markets.
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True. An index fund buys the securities of a given index so that it can stay abreast of "the market."
6.
A mutual fund is a(n) _______.
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Package of several types of securities. Although some mutual funds invest only in stocks or bonds, mutual funds as a whole are open to several types of securities.
7.
To identify the securities in which a mutual fund invests, you can read its _______.
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Prospectus. This is the only of the above choices that lists a money market fund's holdings.
8.
Mutual fund management expenses are covered by fees.
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True. Management costs are included in the 12b-1 fees.