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Funds Beginner: Introduction to Mutual Funds

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1.
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.
2.
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.
3.
_______ invest in the debts of private companies.
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Corporate bond funds. Corporate bonds are issued by private companies.
4.
What do hybrid mutual funds strive to achieve?
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A particular investment objective. Hybrid funds are defined by their objectives, and their names often reflect this. The other choices are only examples of hybrid funds.
5.
Mutual fund management expenses are covered by fees.
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True. Management costs are included in the 12b-1 fees.
6.
Money market mutual funds invest in all but which of the following?
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Stocks. Money market funds invest in debts, and stocks are not debts.
7.
What are a security's increases in value called after they are sold?
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Capital gains. They are capital gains after they are sold, but paper profit while they are still held.
8.
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.