SIE Investment Companies and Packaged Products

Question 1

What is the key difference between open-end and closed-end mutual funds?

Accepted Answer

Open-end funds continuously issue new shares; closed-end have a fixed number of shares

Answer

Open-end funds invest only in stocks; closed-end invest in bonds

Answer

Closed-end funds are only sold to institutions

Answer

Open-end funds trade on stock exchanges; closed-end do not

Question 2

At what price are open-end mutual fund shares bought and sold?

Accepted Answer

At the next calculated Net Asset Value (NAV)

Answer

At the current market trading price

Answer

At a price set by the broker

Answer

At a fixed price set at fund launch

Question 3

What is a 12b-1 fee?

Accepted Answer

An annual fee charged by mutual funds to cover marketing and distribution costs

Answer

A redemption fee charged when selling fund shares

Answer

A transaction fee for buying ETF shares

Answer

A penalty for early withdrawal from an annuity

Question 4

Which type of mutual fund share class typically has a front-end sales load?

Accepted Answer

Class A shares

Answer

Class B shares

Answer

Class C shares

Answer

Class I shares

Question 5

An Exchange-Traded Fund (ETF) differs from a mutual fund primarily because:

Accepted Answer

ETFs trade on exchanges throughout the day like stocks

Answer

ETFs actively manage their portfolios

Answer

ETFs are only available to institutional investors

Answer

ETFs cannot hold stocks

Question 6

Net Asset Value (NAV) per share is calculated as:

Accepted Answer

(Total assets minus total liabilities) divided by shares outstanding

Answer

Total liabilities divided by shares outstanding

Answer

Total assets divided by total shares outstanding

Answer

Market price minus book value per share