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.
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.
3.
If you do not have the minimum amount needed to start investing in a mutual fund, it is still possible to invest in one.
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True. You may participate in an automatic investment plan until you reach the required minimum amount.
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.
What are bonds sold by states called?
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Municipal bonds. This is the accepted name for them. The term "government bonds" refers to bonds sold by the federal government.
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.
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.