Understanding Mutual Funds

Front

What is a mutual fund?

Back

A financial vehicle that pools assets to invest in securities.

Front

Who manages a mutual fund?

Back

A professional money manager

Front

What is the primary legal obligation of a mutual fund's fund manager?

Back

To work in the best interest of shareholders

Front

How do mutual fund investors typically earn a return?

Back

Through dividends on stocks and interest on bonds

Front

What types of securities might a mutual fund invest in?

Back

Stocks, bonds, and other assets

Front

What is a key advantage of investing in mutual funds?

Back

Access to professionally managed portfolios

Front

Which type of mutual fund focuses on investments that pay a set rate of return? Options: Index funds, Fixed-income funds, Money market funds, Stock funds

Back

Fixed-income funds

Front

What is a major risk associated with high-yield junk bonds in mutual funds?

Back

They are riskier than government securities

Front

What can reduce the overall payout of a mutual fund?

Back

Fees assessed to investors

Front

What type of mutual fund would be most appropriate for an investor who wants tax-exempt income from investments?

Back

Municipal Bond Fund