WorksheetsInvesting - Strand 4 Test
Total questions: 25
Worksheet time: 13mins
Which statement best describes a mutual fund?
A single stock chosen by an investor
A pool of investor money managed to buy securities
A bond issued by the U.S. government
A savings account at a bank
A growth mutual fund is mostly composed of:
Government bonds
Stocks expected to rapidly increase in value
Stocks that pay high dividends
Money market accounts
Which fund contains a mix of stocks, bonds, and money markets?
Sector Fund
Balanced Fund
Mixed Bag Fund
Income Fund
A mutual fund that attempts to match the performance of the S&P 500 is called a:
Growth Fund
Index Fund
Income Fund
Sector Fund
A Target Date (Life Cycle) Fund automatically adjusts:
Only the number of shares an investor holds
Asset mix as an investor approaches retirement
Daily market orders on behalf of the investor
Bond ratings inside the fund
What document is legally required and gives full details about a mutual fund’s objectives, strategies, fees, and managers?
Record Sheet
Fund Certificate
Prospectus
Investment Ledger
Which is TRUE about how mutual fund shares trade?
They trade all day long like stocks
They can only be purchased through a bank
They are bought and sold once per day after market close
They can only be bought in whole numbers (no fractional shares)
What does NAV represent?
The yearly return of a fund
The fund manager’s compensation
A fund’s per-share market value
The total shares held by all investors
NAV is calculated using which formula?
(Assets + Liabilities) / # Shares
(Assets – Liabilities) / # Shares
Earnings / Shares Outstanding
Market Price × Shares
What is an expense ratio?
The fund’s total return divided by its risk
The annual cost of owning a mutual fund or ETF
The tax rate applied to fund earnings
The penalty fee for selling early
Which statement best describes an ETF (Exchange Traded Fund)?
A certificate of deposit sold by banks
A basket of securities that trades like a stock
A mutual fund with guaranteed returns
A form of cryptocurrency
Most ETFs are designed to:
Beat the market through active management
Track and match the performance of a market index
Invest only in gold or commodities
Replace retirement accounts
What is one key difference between ETFs and mutual funds?
ETFs trade all day; mutual funds trade once per day
ETFs can only invest in bonds
Mutual funds cost less than ETFs
ETFs require a minimum investment of $10,000
ETFs are generally considered to have:
Higher expense ratios than mutual funds
No fees at all
Lower expense ratios than index mutual funds
Guaranteed dividend payments
Which of the following is TRUE about ETFs?
They cannot be purchased on margin
They can be shorted
They are sold only at NAV
They must be bought directly from the fund company
ETF investments inside the fund are:
Constantly changing throughout the day
Fixed after the ETF is issued
Determined by investor voting
Rebalanced every hour
ETFs trade on exchanges the same way as:
Bonds
Cryptocurrencies
Stocks
CDs (Certificates of Deposit)
Which of the following is a cost investors might pay when buying or selling ETFs?
Closing fees
Prospectus charges
Commissions on transactions
Bond taxes
Which investment gives investors professional management with actively changing holdings?
ETF
Mutual Fund
CD
Treasury Bill
Which investment can be bought or sold at any time during the trading day?
Mutual Fund
Index Mutual Fund
ETF
Target Date Fund
An investor who wants low costs and the ability to trade intraday would MOST likely choose:
Mutual Fund
ETF
Target Date Fund
Balanced Fund
A fund consisting entirely of technology-sector stocks is classified as a:
Balanced Fund
Sector Fund
Index Fund
Income Fund
A fund with a mix of stocks and bonds best fits which classification?
Growth Fund
Sector Fund
Balanced Fund
Index Fund
Buying an ETF on margin means:
The investor is borrowing money to buy shares
The ETF guarantees a minimum return
The investor avoids transaction fees
The ETF pays out interest like a bond
Why might an investor choose a mutual fund over individual stocks?
Mutual funds offer guaranteed profits
Mutual funds are less risky due to diversification
Mutual funds do not require management
Mutual funds always outperform the stock market
