Chapter 4

Question 1

A business that specializes in pooling funds from individual investors and investing them

Answer 1

Investment Company

Question 2

An investment company that stands ready to buy and sell shares at any time

Answer 2

Open-End Fund

Question 3

An investment company with a fixed number of shares that are bought and sold only in the open stock market

Answer 3

Closed-End Fund

Question 4

The value of assets less liabilities held by a mutual fund, divided by the number of shares outstanding

Answer 4

Net Asset Value (NAV)

Question 5

A sales charge levied on purchases of shares in some mutual funds

Answer 5

Front-End Load

Question 6

A sales charge levied when investors redeem shares

Answer 6

CDSC

Question 7

Named for SEC Rule 12b-1, which allows funds to spend up to 1 percent of fund assets annually to cover distribution and share holder service costs

Answer 7

12b-1 Fees

Question 8

A measure of how much trading a fund does, calculated as the lesser of total purchases or sales during a year divided by average daily assets

Answer 8

Turnover

Question 9

A mutual fund specializing in money market instruments

Answer 9

Money Market Mutual Fund

Question 10

An investment company not accessible by the general public

Answer 10

Hedge Fund