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
How does a closed-end fund differ from an open-end fund?
Answer: It trades on an exchange at a market price that can differ from NAV
Closed-end funds have a fixed share count and trade on exchanges, often at a premium or discount to NAV.
What is a money market mutual fund designed to do?
Answer: Preserve capital and provide liquidity with low risk
Money market funds invest in short-term, high-quality debt to preserve capital and stay liquid.
A back-end load (contingent deferred sales charge) is paid when?
Answer: When shares are sold, often declining over time
A back-end load is charged at redemption and typically decreases the longer shares are held.
What is a balanced fund?
Answer: A fund mixing stocks and bonds in one portfolio
Balanced funds hold both equities and fixed income to balance growth and income.
Why might an index fund have a lower expense ratio than an active fund?
Answer: It requires less research and trading to track an index
Passive index funds simply mirror an index, reducing management and trading costs.
What does a fund's prospectus primarily provide to investors?
Answer: Disclosure of objectives, risks, fees, and performance
The prospectus discloses the fund's objectives, strategies, risks, and costs.
When are mutual fund shares typically priced each day?
Answer: Once after the market closes (forward pricing)
Open-end funds use forward pricing, calculating NAV once daily after market close.