Q11. Both open-end and closed-end funds typically charge:

A)   a front-end load.

B)   a premium to the underlying net asset value (NAV).

C)   an annual management fee.

Q12. For the equity shares of an open-end investment company, the share value:

A)   is determined in the secondary market.

B)   always equals NAV.

C)   may or may not equal NAV.

Q13. The per-share value of an investment company’s assets minus its liabilities is called the:

A)   net asset value.

B)   discount.

C)   current market value.

Q14. Which statement about mutual funds is most accurate?

A)   The liquidity of an open-end fund is provided by the open market.

B)   The redemption fee for a closed-end fund is the commission charged on the sale and a portion of the bid/ask spread of the shares.

C)   Some open-end funds charge no fees.

Q15. A mutual fund has a load of 4 percent and a net asset value (NAV) of $20 per share. What must an investor pay to purchase 250 shares?

A)   $5,208.

B)   $4,800.

C)   $5,200.

Q11. Both open-end and closed-end funds typically charge: fficeffice" />

A)   a front-end load.

B)   a premium to the underlying net asset value (NAV).

C)   an annual management fee.

Correct answer is C)

Both types of managed funds, open-end and closed-end, typically charge an annual management fee. Open-end funds sometimes charge a front-end load or a redemption fee, but closed-end funds do not. Closed-end funds can sell at a premium (or discount) to underlying NAV, but this does not result in compensation to the fund.

Q12. For the equity shares of an open-end investment company, the share value:

A)   is determined in the secondary market.

B)   always equals NAV.

C)   may or may not equal NAV.

Correct answer is B)

Shares of a closed-end investment company are determined in the secondary market and may or may not equal NAV. Share value of an open-end investment company always equals NAV because the investment company stands ready to redeem shares at their net asset value.

Q13. The per-share value of an investment company’s assets minus its liabilities is called the:

A)   net asset value.

B)   discount.

C)   current market value.

Correct answer is A)

The net asset value (NAV) of an investment company is calculated as assets minus liabilities, stated on a per-share basis.

Q14. Which statement about mutual funds is most accurate?

A)   The liquidity of an open-end fund is provided by the open market.

B)   The redemption fee for a closed-end fund is the commission charged on the sale and a portion of the bid/ask spread of the shares.

C)   Some open-end funds charge no fees.

Correct answer is B)

Since closed-end funds are traded in the secondary market for a price determined by supply and demand for shares, the spread along with the sales commission represent the redemption fee. All funds charge fees, although the fees vary widely from fund to fund. In addition, some funds charge a load in addition to fees. The liquidity of an open-end fund is provided by the company that manages it, not the open market

Q15. A mutual fund has a load of 4 percent and a net asset value (NAV) of $20 per share. What must an investor pay to purchase 250 shares?

A)   $5,208.

B)   $4,800.

C)   $5,200.

Correct answer is A)

OP =	$20	= $20.83 × 250 = $5,208
	.96

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