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.
Which of the following is not a method of buying mutual fund shares?
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All of the above are valid methods. All the methods named are valid ways to buy mutual fund shares.
3.
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.
4.
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.
5.
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.
6.
The total return of a mutual fund includes dividends.
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True. Total return includes both dividends and increases in share value.
7.
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.
8.
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.