I.
21.
A mutual fund is a pool of investments used to buy
a large portfolio of securities that will be managed
by a professional advisor.
The investor has to see if a fund would consistently
make money in the future so as to make sure it has
performed well in the past.
22.
An open-end fund issues a fixed number of shares
to raise capital, similar to selling stock in initial
public offerings (IPOs).
The net asset value is the total asset value of a
mutual fund divided by the number of shares
outstanding.
23.
The net asset value is computed at least weekly to
keep investors constantly informed of the value of
their holdings.
24.
The objective of balanced mutual fund is to
minimize the risk while sacrificing the possibilities
of long-term growth.
25.
The P/E ratio tells you how much investors are
willing to pay for one dollar of the company's
earnings.
26.
The success of a fund is measured by how well the
fund achieves the maximum profit it can get from
the market.
27.
To be successful in mutual fund investing, you must
be patient and use the fund as a short-term
investment vehicle.
28.
Earnings tell you the company's profit. By dividing
the number of shares outstanding by the earnings,
you can find the earnings per share.
Value investors buy and sell stock by identifying
stock price movements.
29.
Volume is the amount of stocks that were brought
the day before.
9.
Every fund's prospectus is now required to disclose
everything but fees.
30.
When deciding which stocks to buy, look for one
with a P/E ratio higher than others in its industry.
10.
Fast-growing funds can overwhelm the investor
with extra cash, causing him to make hasty
investment decisions.
31.
When you buy a share in a mutual fund, you
effectively buy a bit of each security held in the
fund's portfolio.
11.
For a closed-end fund, shares are priced by dividing
the value of the fund by the number of shares
owned.
32.
Your decision to purchase shares of a mutual fund
should begin with a careful examination of how
much profit you will get.
12.
Growth funds invest in growth-type stocks that pay
little or no dividend, but concentrate on long-term
capital growth.
13.
High, low and close is an indicator of how much the
price of the stock fluctuated throughout the past
fifty-two weeks.
1.
2.
3.
4.
5.
“O“ for True, “X” for False.
A prospectus describes a fund’s goals, stocks, future
performance, manager, fees, and other information.
Advantages to the voluntary accumulation plan
include the usual benefits of mutual funds plus ease
of operation and automatic reinvestment of
dividends or capital gains.
An investor's shares can be worth less upon
redemption than when they were bought.
6.
Before you invest in a mutual fund, be sure you
completely understand the risk.
7.
Don't select a mutual fund that is too risky for you,
find a fund with a small expense ratio, and beware
of funds that have more than doubled in the past
year.
8.
14.
Income funds usually emphasize preferred stocks,
favoring those that pay dividends.
15.
Investing in mutual funds whose portfolios consist
only of guaranteed U.S. government bonds contains
no element of risk.
16.
In the U.S. it is optional for the prospectus to show
how the fees would be for a hypothetical investment
of $1000 over one, three, five- and ten-years.
17.
Mutual funds are sometimes referred to as
"investment companies,” which raise capital for
corporations and municipalities.
18.
Net change is the change of the price of stock,
which gives the investor an idea whether the
earnings per share is dropping or rising.
19.
The chartists ignore fundamental factors, such as
book values, dividends, and earnings.
20.
The investment company's objectives should
correspond with your own objectives and ability to
tolerate the risk associated with those objectives.
II. Choices
1.
What can an investor know about a stock when it
comes with great volatility?
(a) Its stability must be also great.
(b) The riskiness and potential for profit that the stock
has must be great.
(c) The greater the difference between the high and low, the
riskier the stock is for loss and gain.
(d) If the difference between the high and low is small,
then there is little potential for gain.
2.
Benefits of mutual funds for the beginning investor
do NOT include:
(a) diversification (b) professional management
(c) relatively high profit (d) liquidity and convenience
3.
Which is a good indicator of a stock’s volatility?
(a) Earning per share (b) High, low and close
(c) Volume (d) 52-week high and low.
4. Open-end funds use __________ when redeeming or
selling shares.
(a) NAV (b) SAI (c) FDIC (d) FED
1
5. Which is right about short selling?
(a) Short selling is selling a stock as soon as you buy it.
(b) To sell short, you must first keep the stocks before
you sell them.
(c) You keep the money you earned from selling the
stocks, and wait until the stock price rises.
(d) You will make a profit since you sold them for more
than you bought them for.
6. Which is NOT right about buying on margin?
(a) You must first set up a margin account.
(b) Once you have a margin account, you can always
borrow 50% percent of the cost of buying the stocks
you want.
(c) By borrowing 50 percent of the cost, you are
controlling something twice as valuable as what you
paid for.
(d) This will enable you to gain more profits with less
money.
7. Which is NOT right about book value?
(a) Book value is also called shareholders' equity.
(b) Book value equals the company's liabilities minus its
assets.
(c) In general, the lower the stock price relative to the
book value per share, the better the value.
(d) Look for stocks trading for no more than 1.3 times
book value.
8. Which is correct about fundamental analysis?
(a) Fundamental analysis is a method in which the
investor identifies trends of certain stocks and then
invests accordingly.
(b) Fundamentalists expect stock prices to go up as
earnings of the company grow.
(c) Fundamentalists tend to buy and sell stock in a short
time.
9. Which is correct?
(a) In an open-end fund, investors continually buy and
redeem shares when they add or withdraw their
money from the fund.
(b) Open-end funds are required to establish a monthly
price for shares, called NAV.
(c) An open-end mutual fund is obligated to buy and sell
shares at the current NAV.
12.
13. Which is correct about closed-end mutual funds?
(a) A closed-end mutual fund is constantly offering new
shares to the public and redeeming its outstanding
shares.
(b) The company is obligated to redeem its shares or issue
more shares.
(c) An investor who no longer wants to hold shares in the
fund may simply sell them in the market.
(d) For the most part, open-end fund shares are bought
and sold directly through the fund itself or its agents,
not over-the- counter or on an exchange.
14. A prospectus is NOT
(b) a document given to potential investors in connection
with a public offering of securities.
(c) a written statement of all predictable information
about the company.
(d) required by law.
15. Which is correct about voluntary accumulation plans?
(a) These are investment programs that enable customers
to purchase greater quantities of mutual fund shares
on a regular basis.
(b) One makes additional deposits on a regular basis,
usually semiannually or annually, with which fund
shares are purchased on your behalf.
(c) An investment bank usually acts as administrator of
the plan.
(d) When one mails in a deposit, the bank deducts a
processing fee and purchases from the fund
underwriters as many shares of the fund as possible
with the balance.
16.
(a)
(b)
(c)
(d)
10. Which is NOT correct?
(a) After the initial offering, the closed-end funds’ shares
trade on the New York Stock Exchange or over the
counter.
(b) Supply and demand determines the price of the
closed-end fund.
(c) Timing is more important for purchasing a open-end
fund than it is for purchasing an closed-end fund.
11.
(a)
(b)
(c)
(d)
Why should the investor look at a fund's worst year
in the past 10 years before he/she buys it?
To know how much to risk losing in a bad year.
To compute how much to profit in a certain period.
To decide how long the mutual fund can be held.
To measure what risks accompany the mutual fund in
a period of 1, 5, or 10 years.
An advantage of investing in mutual funds is that
they automatically provide
(a) risk-free investment (b) tax-exempt investment
(c) portfolio diversification (d) grow and yields.
Which is NOT right about picking stocks for longterm investment?
Check to make sure the earnings came from routine
operations, not from one-time occurrence.
Look for a company with strong earning growth in
the past several years that also has a high
dividend
payout ratio.
Stocks trading at a premium can plummet during bad
quarters.
Discount stocks are not generally affected by bad
news and can quickly rise in response to favorable
earnings reports.
17.
Which is NOT an element to consider as selecting a
mutual fund to buy?
(a) Consistency. (b) Bearable risk. (c) Low Expenses
(d) Maximum asset size (e) Tax efficiency.
18.
Which is NOT right about predicting whether or
not a stock will rise in value?
(a) If the company did not made a lot of profit, chances
are it may never profit.
(b) If the company offers an undesirable product, then
the company may fail.
(c) If the company is the only company that offers
something, the company will profit.
2
III. Match each fund type with its relevant
investment
I. O or X
1
2
3
4
5
Typical Investment
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
(a) Fully or largely invested in foreign stocks
(b) High-dividend stocks and bonds,
emphasizing growth
(c) High-dividend stocks and bonds,
emphasizing yield
(d) High-risk stocks of up-and-coming new
21
22
23
24
25
firms
(e) Midsize or large company stocks with solid
26
27
28
29
30
prospects for appreciation
(f) Stocks for individual industries and precious
31
metals firms
32
(g) Stocks in a single region or country
(h) Stocks of established, dividend-paying firms
II. Choices
1
2
3
4
5
6
7
8
9
10
Fund Type
( insert a – h below )
Aggressive growth
Capital growth
11
12
13
14
15
Equity total return
Foreign regional
16
17
18
Growth and income
Income total return
Essay: (please write it on the back)
1. Please talk about the triangular relationship of
investors, investment companies, and
corporations.
2. Please talk about the difference between stocks
and mutual funds
3.Suppose that you have only 500,000 NT dollars,
would you buy stocks or mutual funds? Please
justify your decision.
International
Specialty
Number
Name
Grade
3
4