- Scenario You Are 30 Years Old And Single You Have A Moderate Risk Investment Philosophy You Are Interested In Long Te 1 (124.76 KiB) Viewed 42 times
$112.25
$134.70
$105.75
$106.64
2:
is a no-load fund
charges a 7.85% fee
assesses a 3.25% fee
3:
$3.25 less
$7.85 less
$3.25 more
$7.85 more
4:
7.85%
112.25%
3.25%
5:
134
107
80
100
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 By definition, a mutual fund is a diversified portfolio designed to achieve the goals of income, growth, or both. O A mutual fund investor can choose either to receive current income payments or to have the income automatically reinvested in the fund. O An Important advantage of a mutual fund Investment is that the large required minimum deposit separates the small casual investor from you, the large, serious investor. O The most frequently encountered type of mutual fund is the open-end fund. O O Given your moderate risk investment philosophy, you would be best served by investing in a mutual fund with: O a growth objective. an income objective . O both a growth and an income 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. Risk level Type of mutual fund Long-term corporate bond funds Aggressive growth funds Growth and income funds Among the features that facilitate making investments in a mutual fund are: Check all that apply. Automatic investment programs can be set up to draw from your bank account or paycheck. As your objectives change, you can easily swap shares for another mutual fund within a mutual fund family. O A check-writing feature Any Interest, dividends, and capital gains can be automatically reinvested. As a long-term investor, you do not usually need to worry about back-end fees, because O they are charged to the buyer of your shares at selling time O they are hidden and negligible the fee declines to 0.00% over time % A $4,000 investment in a mutual fund with a 5% front-end load will allow you to make a net investment of $3,800 You should review and rebalance your mutual fund investment never; the fund is rebalanced for you
A fund named "Fidelity Freedom Fund 2030" is a target-date fund designed O to provide a no-hassle, set-it-and-forget-it approach to investing for retirement. O to automatically shift assets from moderate to aggressive as retirement age approaches. O for someone retiring in 20 to 30 years. for someone between the ages of 20 and 30. You have decided to invest in an open-end mutual fund. You are currently looking at a fund-Lincoln Foreign Fund-in your newspaper. The fund is quoted as: Name NAV Net Chg YTD %RET LincForn 112.25 3.25 7.85 Assume that today's opening price of Lincoln Foreign 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 LincFor since it 2 3 Yesterday, each share of LincFor sold for than it did the day before, and offers a return of for the year. 5. If you had $9,000 available to invest, you could purchase shares of LincFor. Your evaluation of the Lincoln Foreign Fund is made easier by the fact that: O mutual funds are careful to explicitly state their investment objectives. a mutual fund broker will select a customized mix for you. O your investment choices are limited.