Funds Beginner: Introduction to Mutual Funds

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
If you do not have the minimum amount needed to start investing in a mutual fund, it is still possible to invest in one.
Choose wisely. There is only one correct answer.
True. You may participate in an automatic investment plan until you reach the required minimum amount.
2.
_______ invest in the debts of private companies.
Choose wisely. There is only one correct answer.
Corporate bond funds. Corporate bonds are issued by private companies.
3.
Which of the following is not a hybrid fund?
Choose wisely. There is only one correct answer.
A stock fund. Stock funds invest in a particular type of security (stocks), whereas hybrid funds are based on particular investment objectives.
4.
The total return of a mutual fund includes dividends.
Choose wisely. There is only one correct answer.
True. Total return includes both dividends and increases in share value.
5.
Common stocks are chosen by stock mutual funds because they have potential for growth.
Choose wisely. There is only one correct answer.
True. Of the two types of stock, common and preferred, common stocks provide the opportunity for growth.
6.
If you buy mutual fund shares from another investor instead of from the fund itself, you are buying _______ shares.
Choose wisely. There is only one correct answer.
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.
7.
In what do money market funds invest?
Choose wisely. There is only one correct answer.
Short-term debts. The money market is composed of short-term debts and nothing else.
8.
Mutual fund management expenses are covered by fees.
Choose wisely. There is only one correct answer.
True. Management costs are included in the 12b-1 fees.