CFS CFS Mutual Funds & ETFs

Question 1

What is the primary difference between an open-end mutual fund and a closed-end fund?

Accepted Answer

Open-end funds issue new shares on demand; closed-end funds have a fixed share count traded on exchanges

Answer

Closed-end funds are only available to institutional investors

Answer

Open-end funds can only hold equities; closed-end funds hold bonds

Answer

Closed-end funds are priced continuously; open-end funds trade at a premium

Question 2

The Net Asset Value (NAV) of a mutual fund is calculated as:

Accepted Answer

(Total assets minus total liabilities) divided by total shares outstanding

Answer

Total assets divided by total liabilities

Answer

Market price of the fund divided by earnings per share

Answer

Total assets minus management fees

Question 3

Which share class of a mutual fund typically charges a front-end sales load at the time of purchase?

Accepted Answer

Class A shares

Answer

Class B shares

Answer

Class C shares

Answer

Class I shares

Question 4

What is a 12b-1 fee in a mutual fund?

Accepted Answer

An annual fee charged to fund assets for marketing and distribution expenses

Answer

A fee charged when purchasing fund shares

Answer

A redemption fee charged upon selling fund shares

Answer

An annual management fee paid to the fund's investment advisor

Question 5

An ETF differs from a traditional mutual fund primarily in that ETFs:

Accepted Answer

Trade on stock exchanges throughout the day at market prices

Answer

Are priced only once per day at NAV

Answer

Cannot be used in tax-deferred retirement accounts

Answer

Charge higher expense ratios on average

Question 6

Which type of mutual fund seeks to replicate the performance of a specific market index?

Accepted Answer

Index fund

Answer

Actively managed fund

Answer

Hedge fund

Answer

Closed-end fund