Chapter 12 Wealth Management 2

What could cause a closed-end fund to trade at a price of 2% or below its NAV?

• Normal supply and demand for shares

• Breaking the buck

• Higher than normal share redemption

What type of investment company has both a fixed portfolio and a fixed termination date in the future?

• ETF

• Unit Investment Trust

• Mutual Fund

• Closed End

Which type of mutual fund primarily aims for long-term capital appreciation and involves higher risk compared to other mutual funds?

• Money Market Funds

• Fixed Income Funds

• Equity Funds

• Hybrid Funds

What is the primary objective of money market mutual funds?

• Long-term Capital growth

• Capital preservation and liquidity

• Generating regular income through coupon payments

• Providing balanced exposure to different asset classes

Which management type has a higher expense ratio?

• Active

• Passive

• Neither, they have equal expense ratios

If you hold your investment in a fund with a back end load for longer than 5 years there normally is no fee when you redeem the shares. True or False?

• True

• False

What is the maximum total 12b-1 fee a fund can charge investors in a certain year?

• 50 basis points

• 30 basis points

• 100 basis points

• 75 basis points

Due to active management many mutual funds exceed expectations. True or False?

• True

• False

Which of the following describes class 1 mutual funds?

• Front end loaded, no restricted access

• High 12b-1 fee, no restricted access

• Restricted access based on institutional guidelines

• Low 12b-1 fee, no restricted access

No-load funds are sold only through third party firms and need broker assistance to complete the transaction. True or False?

• True

• False