Free S-12 Investment Funds Questions and Answers

Question 1

What is the primary feature of a mutual fund?

Accepted Answer

It pools money from investors to invest in a diversified portfolio.

Answer

It is actively traded by investors on stock exchanges.

Answer

It offers guaranteed returns to investors.

Answer

It requires high minimum investments.

Question 2

What is an Exchange-Traded Fund (ETF)?

Accepted Answer

A fund traded on an exchange like a stock

Answer

A closed-end fund with limited shares

Answer

A fund with guaranteed dividends

Answer

A type of hedge fund

Question 3

What is a key characteristic of a closed-end fund?

Accepted Answer

It is traded on exchanges at market prices.

Answer

It continually issues new shares.

Answer

It offers unlimited redemption options.

Answer

It always trades at net asset value (NAV).

Question 4

What does a mutual fund’s expense ratio represent?

Accepted Answer

The fund's annual operating expenses as a percentage of its assets

Answer

The percentage of returns guaranteed by the fund

Answer

The fund's total net income

Answer

The sales fees charged to buy shares

Question 5

What is a no-load mutual fund?

Accepted Answer

A fund that charges no sales fees

Answer

A fund that eliminates management fees

Answer

A fund that does not pay dividends

Answer

A fund with fixed returns