Series 26: Exercise

Exercise

Answer the Following Questions

1. 1. Members of the board of directors of an investment company:
2. I. Can include employees of the custodian firm
3. II. Must include at least 40% of non-interested persons
4. III. Assist with day-to-day portfolio management
5. IV. Vote on a change of investment adviser
6. A. II and IV
7. B. I and III
8. C. II and III
9. D. I and II
10. 2. Which of the following statements about the sale of mutual fund shares is inaccurate?
11. A. The underwriter prepares sales literature.
12. B. The mutual fund company sells shares to the transfer agent at the NAV.
13. C. The transfer agent receives the investor’s payment and issues new shares to buyers.
14. D. The custodian safeguards the proceeds of the sale.
15. 3. What is an important defining characteristic of a mutual fund company?
16. A. The shares are readily bought and sold on the primary, secondary, or OTC market.
17. B. Investors buy from and sell directly to the mutual fund company; shares are newly issued to investors and expire once sold back to the company.
18. C. Mutual funds provide diversification against market risk.
19. D. Mutual funds mostly focus on a particular industrial sector or geographic region.
20. 4. Which of the following statements are true?
21. I. Growth funds have capital appreciation as their primary goal and have limited dividend payouts.
22. II. Value funds invest in companies whose stocks are trading for a relatively high value; that is, the price to earnings ratio is relatively high.
23. III. Income funds invest primarily in bonds.
24. IV. Among bond funds, yield and risk vary.
25. A. I and II
26. B. II and IV
27. C.&#