Funds Beginner: Introduction to Mutual Funds

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1.
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.
2.
If you buy mutual fund shares from another investor instead of from the fund itself, you are buying _______ shares.
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Closed-end. Closed-end fund shares are traded between investors and cannot be bought from the fund itself, except when it sells shares for the very first time.
3.
Which of the following is not a hybrid fund?
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A stock fund. Stock funds invest in a particular type of security (stocks), whereas hybrid funds are based on particular investment objectives.
4.
Stock mutual funds are oriented toward _______.
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Growth. Because stocks have growth potential, stock funds include them.
5.
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.
6.
In what do money market funds invest?
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Short-term debts. The money market is composed of short-term debts and nothing else.
7.
If a fee is charged on mutual fund shares that are sold, it is called a(n) _______.
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Back-end load. These fees are charged on shares that you redeem back to the fund.
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.