QUESTION 1

1. Which of the following statements concerning mutual funds is correct?

   		a. They are conduits through which income passes to shareholders tax-free.
   		b. Purchases and redemptions of shares are made directly with the fund.
   		c. The portfolio of securities held by these funds is usually selected by the board of directors.
   		d. There are no restrictions on the investment policies that the fund must follow.

QUESTION 2

1. Which of the following statements concerning closed-end investment companies is correct?

   		a. Investors must sell their shares to the funds when they liquidate their investment.
   		b. The capitalization of these funds is constantly changing.
   		c. Share prices are determined by the forces of supply and demand.
   		d. They never utilize financial leverage.