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Question 1 of 10
1. Question
Many mutual fund companies allow investors in their fund to transfer their money in and out of different funds in the family without incurring sales charges is also known as
Correct
Many mutual fund companies allow investors in their fund to transfer their money in and out of different funds in the family without incurring sales charges. This is known as a conversion (exchange) privilege.
Incorrect
Many mutual fund companies allow investors in their fund to transfer their money in and out of different funds in the family without incurring sales charges. This is known as a conversion (exchange) privilege.
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Question 2 of 10
2. Question
When a mutual fund charges the fee when the investor withdraws shares (instead of when the investor buys the shares) is also known as:
Correct
When a mutual fund charges the fee when the investor withdraws shares (instead of when the investor buys the shares), it is called a back-end load. Back-end loads encourage investors to invest for the long-term because the load decreases the longer the investor holds the shares.
Incorrect
When a mutual fund charges the fee when the investor withdraws shares (instead of when the investor buys the shares), it is called a back-end load. Back-end loads encourage investors to invest for the long-term because the load decreases the longer the investor holds the shares.
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Question 3 of 10
3. Question
Which of the following occurs when a customer invests a fixed amount of money into a mutual fund on a regular basis—every month, every three months, etc?
Correct
Dollar-cost averaging occurs when a customer invests a fixed amount of money into a mutual fund on a regular basis—every month, every three months, etc. It is popular because it requires no decision making, and because it allows the investor to buy more shares when the price is lower.
Incorrect
Dollar-cost averaging occurs when a customer invests a fixed amount of money into a mutual fund on a regular basis—every month, every three months, etc. It is popular because it requires no decision making, and because it allows the investor to buy more shares when the price is lower.
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Question 4 of 10
4. Question
Which of the following is true for Class A shares?
Correct
Class A shares are bought with a front-end load, and the load can be lowered by investing in large enough amounts to qualify for breakpoints.
Incorrect
Class A shares are bought with a front-end load, and the load can be lowered by investing in large enough amounts to qualify for breakpoints.
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Question 5 of 10
5. Question
Which of the following class of shares is 12b-1 shares?
Correct
Class C shares are 12b-1 shares.
Incorrect
Class C shares are 12b-1 shares.
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Question 6 of 10
6. Question
When a mutual fund shareholder wants to sell, then what strategies mutual fund company should apply?
I. Make withdrawal plans
II. Put restrictions on mutual fund redemption
III. Redeem the shares
IV. Taxation of mutual fund’s investor’s profitsCorrect
When a mutual fund shareholder wants to sell, the mutual fund company redeems the shares; that is, the mutual fund company buys the shares back. When shares are redeemed, they are destroyed, as mutual funds are constantly issuing new shares.
Incorrect
When a mutual fund shareholder wants to sell, the mutual fund company redeems the shares; that is, the mutual fund company buys the shares back. When shares are redeemed, they are destroyed, as mutual funds are constantly issuing new shares.
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Question 7 of 10
7. Question
Many mutual funds allow investors to withdraw funds on a pre-planned, systematic basis. Which of the following relates to this method:
Correct
Many mutual funds allow investors to withdraw funds on a pre-planned, systematic basis. These methods are called withdrawal plans. There are three basic approaches to systematic withdrawal.
Incorrect
Many mutual funds allow investors to withdraw funds on a pre-planned, systematic basis. These methods are called withdrawal plans. There are three basic approaches to systematic withdrawal.
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Question 8 of 10
8. Question
Which of the following is the systematics withdrawal approach that relates to the customer when he wants to receive a fixed dollar amount at every interval:
Correct
The first approach is when the customer wants to receive a fixed dollar amount at every interval. In this case, the fund redeems however many shares necessary at the current net asset value to raise the amount of money requested by the customer.
Incorrect
The first approach is when the customer wants to receive a fixed dollar amount at every interval. In this case, the fund redeems however many shares necessary at the current net asset value to raise the amount of money requested by the customer.
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Question 9 of 10
9. Question
When the customer chooses to redeem shares over a stated amount of time, is known as:
Correct
The customer may choose to redeem shares over a stated amount of time, known as a fixed-time withdrawal plan.
Incorrect
The customer may choose to redeem shares over a stated amount of time, known as a fixed-time withdrawal plan.
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Question 10 of 10
10. Question
Long-term capital gains are capital gains realized from the sale of securities held for longer than a year, and they’re taxed at which of the following the capital gains rate:
Correct
Long-term capital gains are capital gains realized from the sale of securities held for longer than a year, and they’re taxed at the capital gains rate of 15 percent. Capital gains realized from the sale of securities held for less than a year are taxed at regular income tax rates.
Incorrect
Long-term capital gains are capital gains realized from the sale of securities held for longer than a year, and they’re taxed at the capital gains rate of 15 percent. Capital gains realized from the sale of securities held for less than a year are taxed at regular income tax rates.