Investment Jobs Mutual Fund Investment 2

Question 1

What is the Net Asset Value (NAV) of a mutual fund?

Accepted Answer

Total assets minus liabilities divided by shares outstanding

Answer

NAV equals the fund's total assets minus liabilities, divided by the number of outstanding shares.

Question 2

An open-end mutual fund issues shares in what manner?

Accepted Answer

Continuously, creating new shares as investors buy in

Answer

Open-end funds continuously issue and redeem shares directly at NAV.

Question 3

What does the expense ratio of a mutual fund represent?

Accepted Answer

The annual operating costs as a percentage of assets

Answer

The expense ratio is the fund's yearly operating costs divided by its average assets.

Question 4

A front-end load is a fee charged when?

Accepted Answer

At the time shares are purchased

Answer

A front-end load is a sales charge deducted at the time of purchase.

Question 5

Which fund type is professionally managed to beat a benchmark index?

Accepted Answer

An actively managed fund

Answer

Actively managed funds rely on managers selecting securities to outperform a benchmark.

Investment Practice Test