QUARTERLY STOCK MUTUAL FUND REVIEW : Test Your Mutual Fund Knowledge

1. What is a mutual fund?

A. U.S. paper currency exchangeable for precious metals

B. A company owned by its policy holders

C. A plan that purchases retirement benefits

D. An investment where money is pooled from many people and invested in a variety of securities

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2. What do mutual funds invest in?

A. Stocks

B. Bonds

C. Money markets

D. All of the above

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3. A mutual fund’s share price is calculated by:

A. Subtracting current assets from total liabilities

B. Dividing the value of fund securities by number of shares

C. Multiplying expected annual sales by the inflation rate

D. Dividing the hypotenuse by the number of shares

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4. If you buy 100 shares of a mutual fund at $10 per share, what will the value of your investment be if the share price increases to $12?

A. $1,200

B. $1,100

C. $110

D. $120

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5. Name two ways a mutual fund investment can earn money:

A. Income

B. Growth

C. Accrued taxes

D. Indemnification

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6. Name three benefits of mutual fund investing:

A. Professional management

B. Diversification

C. No risk

D. Liquidity

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7. What describes a mutual fund’s investment objectives, management fees, policies, services and other information required by the Securities and Exchange Commission:

A. Thesaurus

B. Prospectus

C. Stock listing

D. Asset allocator

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8. In general, which type of fund might a conservative investor choose for preservation of capital?

A. Money market

B. Income

C. Growth-and-income

D. Growth

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9. What is the first thing to do when deciding on an investment?

A. Ask friends what investments they like

B. Read newspaper section on mutual funds

C. Define your personal investment goal

D. Divide investment among four top-performing funds

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Answers: 1.(d); 2.(d); 3.(b); 4.(a); 5.(a&b;); 6.(a,b&d;); 7.(b); 8.(a); 9.(c) Source: Fidelity Mutual Funds