Investing Through Mutual Funds

Scenario:You are 30 years old and single. You have a moderate risk investment philosophy. You are interested in long-term investing, but you do not have sufficient funds to buy a variety of investments to be fully diversified and you do not feel you have the expertise to make good choices.

Read the statements and indicate whether each statement is true or false.

Statement	False	True
An important advantage of investing in a mutual fund is the convenience and ease of selecting a fund that matches your investment objectives.
If you name a beneficiary, your mutual fund investment can be transferred to an heir without going through probate.
Mutual funds don't distribute dividends; rather, they generate income by creating capital gains.
A fund's exchange privilege allows a fund investor to exchange shares between different funds within the same family of funds.

Given your moderate risk investment philosophy, you would be best served by investing in a mutual fund with:

a. an income objective.

b. both a growth and an income objective.

c. a growth objective.

Rank the following three types of funds from lowest to highest levels of risk and return. Use a 1 to denote the lowest level of risk/return and 3 to indicate the highest levels.

Type of mutual fund	Risk level
Sector funds	?
Money market funds	?
Asset allocation funds	?

Among the features that facilitate making investments in a mutual fund are:Check all that apply.

a. Any interest, dividends, and capital gains can be automatically reinvested.

b. Automatic investment programs can be set up to draw from your bank account or paycheck.

c. A systematic withdrawal plan

d. A check-writing feature

The best mutual funds in which to invest are usually

a. back-end load funds

b. no-load funds

c. front-end load funds

A $6,000 investment in a mutual fund with a 6% front-end load will allow you to make a net investment of$___________ .

You should review and rebalance your mutual fund investment ____________.

The FINRA's website may be used to do all of the following except

a. look up available discounts on a large number of funds

b. purchase low-cost mutual fund shares

c. look up and compare applicable fees for thousands of funds

d. analyze the impact of fees and expenses on your investment

You have decided to invest in an open-end mutual fund. You are currently looking at a fund ________Washington Premier Fund _______in your newspaper. The fund is quoted as:

Name	NAV	Net Chg	YTD %RET
Wash Pre	36.25	0.15	6.95

Assume that today's opening price of Washington Premier Fund equals yesterday's closing price. If you wanted to make your investment first thing this morning, then you should expect to pay ______ for each share of Wash Pre sinceit ________.

Yesterday, each share of Wash Pre-sold for _______than it did the day before, and offers a return for the year.

If you had $8,000 available to invest, you could purchase ________ shares of Wash Pre.

Your evaluation of the Washington Premier Fund is made easier by the fact that:

a. mutual funds are careful to explicitly state their investment objectives.

b. your investment choices are limited.

c. a mutual fund broker will select a customized mix for you.