PF 7-4 The Nature of Mutual Funds

An investment security that offers the diversification of an index mutual fund but trades like a stock throughout the day is called:

• a mutual fund

• an index fund

• an exchange-traded fund

• a money market fund

This type of fund sets a predetermined limit on the amount of shares that it can sell.

• closed-end fund

• open-end fund

• index fund

• money market fund

The type of mutual fund that intends to mirror the returns of a market index, like the S&P 500, is called:

• a mutual fund

• an index fund

• an exchange-traded fund

• a bond fund

Darrell wanted to start investing money monthly but wanted to manage his risk by investing in many assets, versus just one. Darrell’s investment strategy includes:

• diversification

• a prospectus

• an online broker

• research

Stephanie is trying to find out detailed information about an investment. The best resource for her to review is the:

• online research materials

• prospectus

• closed-end fund

• an online news blog specializing in the type of investment she is pursuing

An open-end fund:

• is an index fund that tracks a certain market index

• limits the amount of shares it can sell

• is an ETF

• can issue an unlimited number of shares

A professionally managed pool of investments including stocks and bonds and other assets is called:

• a mutual fund

• a government bond

• a treasury bond

• an online brokerage account

A large-cap stock mutual fund invests in companies whose market capitalization range is:

• $10B or greater

• $2B-$10B

• $300M-$2B

• $100K-$1B

A small-cap stock mutual fund invests in companies whose market capitalization range is:

• $10B

• $2B-$10B

• $300M-$2B

• $100K-$1B

A mid-cap stock mutual fund invests in companies whose market capitalization range is:

• $10B

• $100K-$1B

• $300M-$2B

• $2B-$10B