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PF - 6.1 - 6.2

Total questions: 20

Worksheet time: 12mins

Name
Class
Date
1.

The individual assets contained in an actively managed mutual fund are selected by…

a)
The pool of investors
b)
The investor who owns the most shares of the fund
c)
An automated computer program
d)
A professional fund manager
2.
Which is the best description of an index fund?
a)
A mutual fund that tracks the performance of a specific market benchmark
b)
A retirement fund for employees over age 50
c)
An index made up exclusively of government bonds
d)
A safe investment product that guarantees a high rate of return
3.
One downside of active investing is that…
a)
You must have a license, certification, or college degree to make these types of investments
b)
You must buy and sell each day in order for it to work correctly
c)
You are paying a fund manager who charges fees that will eat into your potential returns
d)
You cannot diversify your portfolio using this strategy
4.
All of the following are true about target date funds (TDFs), EXCEPT…
a)
TDFs automatically reallocate your investments over time
b)
TDFs are a good investment option for hands-off investors
c)
TDFs track the performance of a particular market index
d)
TDFs are invested in primarily in stocks when the target date is far in the future
5.
How is an exchange traded fund (ETF) different from a mutual fund?
a)
An ETF can be traded throughout the day and bought from other investors, like a stock
b)
An ETF can only be bought at the end of the day from the fund provider
c)
An ETF is usually actively traded and has higher expense ratios
d)
An ETF is a pooled investment that uses funds from many different investors
6.
What is a robo-advisor?
a)
A security algorithm used by some fund managers to protect your investments
b)
An investment management service that uses a computer program to manage assets
c)
A financial manager who provides specialized advice about technology funds
d)
A popular type of exchange traded fund (ETF) with a low minimum investment
7.

  1. The S&P 500 is…

a)

  1. An actively managed mutual fund

b)

  1. A diverse collection of stocks and bonds

c)

  1. An index of the  500 largest publicly-traded companies in the world

d)

  1. An index of the 500 largest publicly-traded companies in the US

8.

  1. All of the following are true about robo-advisors, EXCEPT…

a)

  1. Robo-advisors generally have lower fees than a traditional financial advisor

b)

  1. Robo-advisors generally have a higher account minimum than a traditional financial advisor

c)

  1. Robo-advisors use an algorithm to automate the investing process

d)

  1. Robo-advisors generally invest your portfolio based on your goals and risk tolerance

9.

  1. Alberto has decided to invest his retirement money into a mutual fund filled with mid-sized US companies. The fund manager is…

a)

  1. A CEO at one of those midsize companies

b)

  1. The person who selects which stocks to include in the fund

c)

  1. The website where Alberto logs in to check his fund’s value

d)

  1. The budgeting software Alberto uses to make sure he has enough saved every month

10.

  1. Alma recently started investing in a target-date fund with a planned retirement date that is 38 years in the future. How is the portfolio in her TDF most likely allocated?

a)

  1. Majority stocks and a small percentage of bonds

b)

  1. Half stocks and half bonds

c)

  1. Majority bonds and a small percentage of stocks

d)

  1. Her TDF allocation will depend on the specific securities she selects

11.


 Which statement about the investment fees associated with mutual funds is true?

a)

  1. You’ll pay a one-time fee when you start your investment portfolio with a mutual fund

b)

  1. You’ll only pay fees to your fund manager if your portfolio has a return over 5%

c)

  1. Fees are typically set at 10 to 15%, annually, of the amount you have invested

d)

  1. Fees, compounded over the life of your investment, can substantially decrease your returns

12.

  1. Which type of fund is usually actively managed, can be bought or sold from the fund provider , and trade settlement happens at the end of the day?

a)


Mutual fund

b)

  1. Robo-advisor

c)

  1. Exchange-traded fund

d)

  1. Target date fund

13.

  1. In 2022, Noah decided to start investing in a target-date fund at Alpine brokerage. They are 24 years old, have been working for 5 years, and are planning on retiring at 67. Which target-date fund should they choose?

a)

  1. Alpine Target Retirement 2060 Fund

b)

  1. Alpine Target Retirement 2065 Fund

c)

  1. Alpine Target Retirement 2070 Fund

d)

  1. Alpine Target Retirement 2075 Fund

14.

It is recommended that younger investors have a higher proportion of bonds in their portfolios and older investors have a higher proportion of stocks in their portfolios.

a)

True

b)

False

15.

You model your investment account using the formula y = 20000(1.035)x where x represents the number of years and y represents the account balance after x years. What is the growth rate of your investment?

a)

103.5%

b)
3.5%
c)
35%
d)

1.035%

16.

Alec’s portfolio includes a bond fund that has an average annual growth of 3.5% per year.  If he invests $165, what will his investment balance be after 25 years?


(a)  

17.
Which of the following functions shows an initial amount of $15 and an increase of 35% each year?
a)
y = 15(35)x
b)
y = 15(1.35)x
c)
y = 15(0.35)x
d)
y = 35(1.15)x
18.

Calculate the simple return on investment if the initial investment is $2000 and the final value is $2500.

a)

12.5

b)

15

c)

20

d)

25

19.
—Buying little pieces of a whole lot of different companies
a)
Stocks
b)
Bonds 
c)
Mutual funds
d)
T-bills
20.

What is the formula to calculate simple return on investment? (a simple return would have no cost to calculate in)

a)

(Ending Value - Beginning Value) / Beginning Value

b)

(Ending Value - Beginning Value) / Ending Value

c)

(Ending Value + Beginning Value) / Beginning Value

d)

(Ending Value - Beginning Value) / (Ending Value + Beginning Value)

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