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 primary regulatory body overseeing mutual funds in the US?
Answer: The Securities and Exchange Commission (SEC)
The SEC regulates mutual funds primarily under the Investment Company Act of 1940.
What is turnover ratio in a mutual fund?
Answer: The percentage of holdings bought and sold within a year
Turnover ratio measures how frequently the fund trades its holdings annually, affecting costs and taxes.
A growth fund primarily seeks what objective?
Answer: Capital appreciation through stocks expected to grow faster than average
Growth funds invest in companies expected to appreciate faster than the overall market.
What tax advantage do municipal bond funds typically offer?
Answer: Interest income exempt from federal income tax
Municipal bond funds generate interest that is generally exempt from federal income tax.
What is an income fund designed to provide?
Answer: A steady stream of income through dividends or interest
Income funds focus on generating regular income from dividend-paying stocks or bonds.
Which share class commonly charges a front-end load?
Answer: Class A shares
Class A shares typically carry a front-end sales load with lower ongoing expenses.
What risk is unique to bond mutual funds when interest rates rise?
Answer: Interest rate risk causing bond prices to fall
When interest rates rise, existing bond prices fall, lowering the bond fund's NAV.