The document discusses various topics related to mutual funds and investing, including different types of mutual funds, risks associated with investing, regulations that govern mutual funds, and performance metrics. It provides definitions and explanations for terms like net asset value, systematic risk, leverage, expense ratio, and several acts related to securities. The document is in the form of questions and answers.

1. Donna M. Kesot, CPCU, Copyright 2012 . All Rights Reserved, 4-11-2012

2. Mutual
Risks Investing 101 Miscellaneous
Funds
100 100 100 100
200 200 200 200
300 300 300 300
400 400 400 400

3.  The risk that an asset cannot be sold on
short notice without incurring a loss

4.  What is liquidity risk?
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5.  Name 4 investment risks

6. What are:
 Inflation risk
 Financial risk
 Business risk
 Exchange Rate risk
 Interest Rate risk
 Market risk
 Specific/unsystematic risk
 Systematic risk?
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7.  Specific risk or unsystematic risk

8. What risk that arises from features that are
unique to a particular risk?
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9.  Risk that is common to all securities of the
same general class and therefore
cannot be eliminated by diversification

10. What is systematic risk?
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11.  Advantages of mutual funds

12. What are diversification, professional
management, convenience, and ready
marketability?
 Disadvantages are
 Cost of Intermediary
 Expense can vary
 Selection issue
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13.  Mutual Fund Investment Co. Types (3)

14. What are
1. Face Amount Certificates
2. Unit Investment Trusts mutual funds?
3. Management Companies?
For additional 400 points. Are these
more or less secure than US Treasury
issues? Home

15. The market value of a fund share

16.  What is Net Asset Value (NAV)?
(Mutual fund net worth) ÷ (# of
mutual fund shares outstanding)
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17.  Mutual Fund Types

18.  What are
 Open-ended Funds
 Closed-end Funds
 Load & No-Load Funds?
› Front end loads are funds where the investor
pays a fee at purchase but not at
redemption
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19.  A large investment portfolio comprising
many different securities—either
stocks, bonds, or both—in addition to
other investments

20. What is a mutual fund?
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21.  Index Fund

22. A mutual that tracks the market
rather than trying to outperform
the market
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23.  The practice of using borrowed money
to invest

24.  What is leverage?
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25. Steps of an Investment Plan

26. What are
1. Determine investment goals
2. Estimate savings requirements and set priorities
3. Determine acceptable level of investment risk
4. ID investment alternatives
5. Select the appropriate investment approach
6. Monitor & review the investment plan?
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27.  The profit a securities or capital
investment usually, an annual
percentage rate

28.  What is an investment return?
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29.  Exchange Traded Fund

30.  What is a fund purchases assets and sells
shares like a mutual but which can be
traded like a stock because the shares
represent proportional ownership
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31.  Two Acts which regulates investment
companies

32. What are:
Sale of shares
1. Securities Act of 1933
2. Securities Exchange Ac t of 1934
Operations
 Company Act of 1940 (operations
 Investors Advisement Act of 1940
Daily Double = 600 points
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What does SEC stand for?

33.  Two ways to measure administrative
performance of funds

34. What are expense ratio and income ratio?
 E/R = Total operating expenses ÷fund net assets
 I/R= Total operating expenses ÷ Fund Incomes
 Total operating expenses includes
management fees and expenses
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