Series 26: Chapter 1 Practice Questions

Taken from our Series 26 Online Guide

Chapter 1 Practice Questions

  1. 1. Which of the following is not a difference between open-end and closed-end funds?
  2. A. Shares of open-end funds are purchased through the issuer, while shares of closed-end funds are not.
  3. B. Supply and demand dictates the price of open-end funds but not the price of closed-end funds.
  4. C. Shares of open-end funds are redeemable, while closed-end funds are not.
  5. D. Shares of open-end funds are priced once a day, while closed-end funds are priced continually throughout the day.
  6. 2. What price will you receive when you purchase shares of a mutual fund?
  7. A. Market price
  8. B. Next calculated NAV
  9. C. Most recently calculated NAV
  10. D. Weighted average volume price
  11. 3. When interest rates rise, which of the following are typically true about an open-end bond fund?
  12. I. The NAV of the fund will go down.
  13. II. The NAV of the fund will remain unchanged.
  14. III. The fund’s yield will increase in the longer term.
  15. IV. The fund’s yield will decrease in the longer term.
  16. A. I and III
  17. B. II and III
  18. C. I and IV
  19. D. II and IV
  20. 4. Rank the following categories of mutual funds in order of volatility, from highest to lowest.
  21. I. Growth and income
  22. II. Balanced
  23. III. Growth
  24. IV. Equity income
  25. A. I, III, II, IV
  26. B. III, II, I, IV
  27. C. III, I, II, IV
  28. D. III, I, IV, II
  29. 5. According to the Investment Company Act of 1940, for the 75% of its assets invested in cash, cash equivalents, or securities, a diversified mutual fund will have:
  30. A. No more than 5% of its assets in any one company and will own no more than 5% of any company’s outstanding shares
  31. B. No more than 5% of its assets in any one company and will own no more than 10% of any company’s outstanding shares
  32. C. No more than 10% of its assets in any one company and will ow

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