Funds Beginner: Introduction to Mutual Funds

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1.
Stock mutual funds are oriented toward _______.
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Growth. Because stocks have growth potential, stock funds include them.
2.
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.
3.
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."
4.
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.
5.
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.
6.
_______ 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.
7.
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.
8.
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.