Mutual Funds Quiz

What is a mutual fund?

• A private investment for a single investor

• A government-issued security

• An investment that is made up of a pool of funds collected from many investors

• A type of personal savings account

Which of the following is NOT a type of security that mutual funds typically invest in?

• Stocks

• Bonds

• Commodities

• Money Market Accounts

Money Market Accounts are similar to which of the following?

• Checking accounts

• Savings accounts

• Credit accounts

• Loan accounts

Which of the following features is NOT associated with Money Market Accounts?

• Require you keep higher monthly balance

• Lower interest rate than savings

• Can write checks

• Higher interest rate than savings

What is one of the purposes of mutual funds?

• To decrease portfolio diversity

• To concentrate risk

• To diversify portfolio

• To eliminate the need for professional investment management

What does dollar cost averaging allow investors to do?

• Invest the same amount of money at regular intervals

• Increase risk in investments

• Decrease the number of investments

• Invest all their money at once

What is a benefit of having professional investment management in mutual funds?

• Decreased flexibility in investments

• Limited investment options

• Lack of diversification

• Expertise in managing investments

How do mutual funds offer flexibility to investors?

• By allowing large, inflexible investments

• By providing greater flexibility to shift funds between investments

• By restricting the timing of investments

• By offering only one type of investment

Who typically runs a mutual fund?

• Individual investors

• Managers

• Stock analysts

• Government officials

What is a 529 College Account?

• A) A tax-deductible retirement savings account

• B) A tax-deductible college savings account

• C) A high-interest loan for college expenses

• D) A grant provided by educational institutions