Mutual Funds & Asset allocation

What makes mutual funds attractive to novice investors?

• Guaranteed returns

• High-risk leverage

• Professional management and diversification

• Tax-free income

• Real-time control over holdings

Which of the following is an open-end mutual fund?

• A hedge fund

• A fund with a fixed number of shares

• A fund that continuously issues and redeems shares at NAV

• An ETF

• A money market account

Mutual fund NAV is calculated by:

• Total assets minus liabilities divided by total shares

• Total returns divided by assets

• Market cap divided by price

• Total dividends divided by stock price

• Book value divided by liabilities

Which of these expenses reduces investor returns from mutual funds?

• Capital gains

• Dividends

• Management fees

• NAV growth

• Indexing

What is a major advantage of index mutual funds?

• High turnover

• Active speculation

• Low expense ratio

• High alpha

• Insider access

Which scenario best explains over-diversification in mutual funds?

• Investing in 3 stocks

• Holding only bonds

• Holding hundreds of overlapping assets with minimal risk reduction

• Buying only tech mutual funds

• Switching funds monthly

What should an investor analyze when comparing mutual funds?

• Number of employees

• CEO net worth

• Expense ratio and historical performance

• IPO valuation

• Headquarters location

Why might an investor prefer mutual funds over individual stocks?

• Higher leverage

• Better control

• Greater diversification

• Higher guaranteed return

• Insider access

A mutual fund has total assets of $10 million, liabilities of $0.5 million, and 95,000 outstanding shares. What is its NAV?

• $100

• $105.26

• $99.99

• $100.53

• $104.20

If an investor owns 300 shares of a mutual fund with a NAV of $45, what is the total investment value?

• $13,000

• $13,500

• $14,000

• $12,500

• $15,000