Exercise
Answer the Following Questions
1. Members of the board of directors of an investment company:
I. Can include employees of the custodian firm
II. Must include at least 40% of non-interested persons
III. Assist with day-to-day portfolio management
IV. Vote on a change of investment adviser
A. II and IV
B. I and III
C. II and III
D. I and II
2. Which statements are true?
I. Growth funds have capital appreciation as their primary goal and have limited dividend payouts.
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.
III. Any lifecycle fund can be recommended for an investor of any age because such funds are designed to provide payouts throughout a person’s lifecycle.
IV. Among bond funds, yield and risk vary.
A. I and II
B. II and IV
C. I and IV
D. II and III
3. What is an important defining characteristic of a mutual fund company?
A. The shares are readily bought and sold on the primary, secondary, or OTC market.
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.
C. Mutual funds provide diversification against market risk.
D. Mutual funds mostly focus on a particular industrial sector or geographic region.
An