Mutual Funds Overview

What are the different types of mutual funds?

• crypto funds

• equity funds, debt funds, hybrid funds, money market funds, index funds

• real estate funds

• commodity funds

Explain one benefit of investing in mutual funds.

• Low risk

• Immediate liquidity

• High returns guaranteed

• Diversification

What is one risk associated with mutual funds?

• Market risk

• Credit risk

• Inflation risk

• Interest rate risk

How is Net Asset Value (NAV) calculated for a mutual fund?

• NAV = Total Value of Assets / Total Number of Outstanding Shares

• NAV = (Total Value of Assets - Total Value of Liabilities) / Total Number of Outstanding Shares

• NAV = Total Value of Liabilities / Total Number of Outstanding Shares

• NAV = Total Value of Assets + Total Value of Liabilities / Total Number of Outstanding Shares

Name one investment strategy commonly used in mutual funds.

• Diversification

• Putting all funds in one stock

• Timing the market

• Concentration

What is a money market mutual fund?

• A money market mutual fund is a type of real estate investment trust that invests in properties.

• A money market mutual fund is a type of stock that invests in long-term debt instruments.

• A money market mutual fund is a type of cryptocurrency that invests in digital assets.

• A money market mutual fund is a type of mutual fund that invests in high-quality, short-term debt instruments.

How can diversification benefit mutual fund investors?

• By investing only in one specific industry to maximize returns.

• By spreading investments across different asset classes, industries, and regions to reduce risk.

• By ignoring regional diversification to concentrate investments.

• By focusing on a single asset class to increase risk.

What is the role of a fund manager in a mutual fund?

• The role of a fund manager in a mutual fund is to make investment decisions, analyze market trends, select securities, and manage the fund's portfolio.

• Fund managers are responsible for marketing the mutual fund

• The role of a fund manager is to handle customer service inquiries

• Fund managers primarily focus on administrative tasks

Explain the concept of expense ratio in mutual funds.

• The expense ratio is the measure of the fund's performance

• Expense ratio is the total amount of money invested in the fund

• It represents the number of shares held by the mutual fund

• The expense ratio in mutual funds is the measure of the total annual fund operating expenses expressed as a percentage of the fund's average net assets.

What is the difference between open-end and closed-end mutual funds?

• Open-end funds have a fixed number of shares, while closed-end funds continuously issue and redeem shares.

• Open-end funds are only available to institutional investors, while closed-end funds are open to retail investors.

• Open-end funds are traded on the secondary market, while closed-end funds are bought directly from the fund manager.

• Open-end mutual funds continuously issue and redeem shares based on investor demand, while closed-end mutual funds have a fixed number of shares that are bought and sold on the secondary market.