Mutual Funds Quiz

What is a mutual fund?

• A type of bank account

• An investment company that collects money from investors

• A government bond

• A savings account

List the two ways mutual funds are managed.

• Actively and passively

• Quickly and slowly

• Aggressively and defensively

• Locally and globally

Describe an actively managed mutual fund.

• Uses a computer to buy stocks

• Has a manager who decides how the fund’s money is invested

• Follows a buy and hold strategy

• Matches the stock market’s average return

What is the manager trying to beat in an actively managed mutual fund?

• The bond market

• The stock market’s average return

• The inflation rate

• The interest rate

Describe a passively managed mutual fund.

• Uses a computer to buy stocks and bonds

• Has a manager who actively trades

• Invests only in real estate

• Focuses on short-term gains

What are passive funds trying to match?

• The stock market’s average return

• The highest possible return

• The lowest possible risk

• The interest rate

List two reasons passively managed funds have lower fees than actively managed funds.

• They don’t have to pay a fund manager and follow a buy and hold strategy

• They invest in high-risk stocks and bonds

• They require frequent trading and analysis

• They focus on short-term gains and losses

Explain the investment strategy that is called “Buy and Hold.”

• Buying stocks and selling them quickly

• Buying stocks and holding them for a long period of time

• Buying bonds and trading them frequently

• Buying real estate and renting it out

What are large cap funds?

• Mutual funds that invest in companies valued at more than $10 billion.

• Mutual funds that invest in small companies worth less than $2 billion.

• Mutual funds that invest in companies valued between $2 billion – $10 billion.

• Mutual funds that invest in foreign companies.

Which of the following lists contains three large cap companies?

• Apple, Microsoft, Coca-Cola

• Pepsi, Ford, IBM

• Google, Amazon, Tesla

• Samsung, Sony, LG