Mutual Fund

1

• Mutual Fund
• Unit
• Review

2
True or False The pricing of mutual funds are
based on Net Asset Value (NAV)
3

• Which of the following is NOT one of the three
  ways you can gain income from a mutual fund
• Dividends in which the underlying shares pay a
  dividend
• Capital Gains Distributions in which the manager
  sells the underlying shares for a profit
• Dividend Gains Distributions in which the fund
  shares themselves pay a dividend
• Capital Gains in which you sell your shares in
  the fund for a profit

4
True or False Pricing of Exchange Traded Funds
are based on Net Asset Value (NAV)
5
True or False A mutual fund prospectus contains
information about the funds current price?
6

• If the value of the underlying shares of a mutual
  fund are worth 150 million and there are 15
  million shares of the fund outstanding, what does
  it cost to buy one share?
• 5 per share
• 10 per share
• 15 per share
• You cant tell based on the info provided

7

• If the value of the underlying shares of an
  exchange traded fund are worth 150 million and
  there are 15 million shares of the fund
  outstanding, what does it cost to buy one share?
• 5 per share
• 10 per share
• 15 per share
• You cant tell based on the info provided

8

• What are the most stars Morningstar gives to its
  top-rated funds?
• One
• Two
• Three
• Four
• Five
• Six

9
True or False A load is a type of sales
commission?
10
True or False Management fees are a one-time
charge to investors?
11

• In what year do you pay tax on a capital gains
  distribution you earn from the underlying shares
  in a mutual fund?
• In the year in which the underlying shares are
  sold for a gain regardless of when you sell your
  fund shares
• In the year in which you sell your fund shares
  regardless of when the underlying shares were
  sold for a gain
• Never because capital gains distributions in a
  mutual fund are not taxable.
• None of the above are correct

12
True or False Some firms charge a redemption fee
or deferred load when you sell your shares
13

• In what year do you pay tax on the dividends you
  earn from the underlying shares in a mutual fund?
  
• In the year in which the dividend is paid
  regardless of when you sell your fund shares
• In the year in which you sell your fund shares
  regardless of when the dividend was paid
• Never because dividends in a mutual fund are not
  taxable.
• None of the above are correct

14

• How do you calculate Net Asset Value (NAV)?
• Number of the fund shares divided by the Value of
  the underlying assets
• Number of the underlying shares divided by the
  value of the fund assets
• Value of the underlying assets divided by the
  number of underlying shares
• Value of the underlying assets divided by the
  number of fund shares

15
True or False You should seek funds where the
tenure of the manager is short (AOTBE).
16
True or False 12b-1 fees are advertising fees
that are a one-time charge
17

• In what year do you pay tax on the capital gains
  you earn by selling your mutual fund shares?
• In the year in which the underlying shares are
  sold for a gain regardless of when you sell your
  fund shares
• In the year in which you sell your fund shares
  regardless of when the underlying shares were
  sold for a gain
• Never because capital gains in a mutual fund are
  not taxable.
• None of the above are correct

18

• You can buy mutual funds from
• The investment management company itself (e.g.
  Fidelity)
• A broker (e.g. (Charles Schwab) who in turn buys
  them from the investment company for you
• Either A or B
• Neither A nor B

19
What types of companies would be in a fund with
this Morningstar Style Box?

1. Companies with a market cap greater than 1.5
   Billion and higher potential for capital
   appreciation
2. Companies with a market cap less than 1.5
   Billion and higher potential for dividend income
3. Companies with a market cap greater than 1.5
   Billion and higher potential for dividend income
4. Companies with a market cap less than 1.5
   Billion and higher potential for capital
   appreciation

20

• Which of the following is NOT an advantage a
  mutual fund has over buying stock
• Lower cost of entry
• Professional Management
• Diversification
• More rapid growth potential
• All of the above are advantages

21
For an exchange traded fund, does a supply and
demand price always equal NAV?
22

• Which of the following is NOT an advantage of
  buying funds from a broker?
• One phone call to your broker enables you to buy
  funds from multiple companies
• You receive consolidated statements reflecting
  all your funds
• You avoid paying a commission
• All of the above are advantages

23

• Which of the following would NOT be more actively
  managed
• A Latin American fund
• A healthcare mutual fund
• An index mutual fund
• An aggressive growth fund

24
What types of companies would be in a fund with
this Morningstar Style Box?

1. Companies with a market cap greater than 1.5
   Billion and higher potential for capital
   appreciation and dividends
2. Companies with a market cap greater than 1.5
   Billion and higher potential for dividend income
3. Companies with a market cap greater than 5
   Billion and potential for capital appreciation
   and dividend income
4. Companies with a market cap less than 5 Billion
   and higher potential for dividend income

25

• All of the following are disadvantages of a
  mutual fund has vs. buying stock, except?
• Cant trade intraday
• Funds have lower fees
• Cant do short selling
• Cant do margin buying
• Cant do limit orders

26
True or False Exchange Traded Funds are traded
on an exchange
27

• Which are more popular based on total dollars
  invested?
• Mutual funds
• Exchange traded funds

28

• Which are growing more rapidly based on the
  increase in number or increase in dollars of
  investment?
• Mutual funds
• Exchange traded funds

29
Final Jeopardy Complete the Mutual Fund
Categorization Sheet