Mutual Fund Investment Flashcards
7 cards from real Investment practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Mutual Fund Investment flashcards as text
What is the Net Asset Value (NAV) of a mutual fund?
Answer: Total assets minus liabilities divided by shares outstanding
NAV equals the fund's total assets minus liabilities, divided by the number of outstanding shares.
An open-end mutual fund issues shares in what manner?
Answer: Continuously, creating new shares as investors buy in
Open-end funds continuously issue and redeem shares directly at NAV.
What does the expense ratio of a mutual fund represent?
Answer: The annual operating costs as a percentage of assets
The expense ratio is the fund's yearly operating costs divided by its average assets.
A front-end load is a fee charged when?
Answer: At the time shares are purchased
A front-end load is a sales charge deducted at the time of purchase.
Which fund type is professionally managed to beat a benchmark index?
Answer: An actively managed fund
Actively managed funds rely on managers selecting securities to outperform a benchmark.
What is a key advantage of a mutual fund for small investors?
Answer: Instant diversification with a small investment
Mutual funds pool money, giving small investors access to a diversified portfolio.
A 12b-1 fee covers what fund expense?
Answer: Distribution and marketing costs
12b-1 fees are annual marketing and distribution charges included in the expense ratio.