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21.The capital gains and earnings of mutual funds

a.are taxed at a lower rate than individuals’, a major aspect of their popularity.

b.are taxed only on the interest income, not the capital gains, a major aspect of their popularity.

c.are not taxed as long as they distribute a very high proportion of earnings to shareholders who pay  taxes on gains and income.

d.are not taxed only as long as they invest in tax-free municipal securities.

 

22.Real estate investment trusts are ________ investment companies that tend to prosper               when

a.open-end; interest rates are low.

b.open-end; interest rates are high.

c.closed-end; interest rates are low.

d.closed-end; interest rates are high

 

23.The rapid growth of real estate investment trusts seems to be associated with

a.low interest rates.

b.favorable tax sheltering.

c.an expanding economy.

d.all of the above

 

24.Money market funds are included in definitions of the money supply because

a.they are invested in high quality assets.

b.they are invested in short-term assets.

c.they provide investors opportunities to access their MMMF accounts very quickly via wire transfers and debit cards.

d.of all of the above.

 

25.Which of the following is associated with money market mutual funds?

a.Short-term money market investments

b.Provide excellent liquidity for investors

c.High quality and relatively high yield when the yield curve is inverse

d.all of the above

 

26.Mutual fund managers can keep their cash balances low by all but one of the following:

a.maintaining lines of credit at commercial banks

b.increasing redemption fees

c.working to maintain low NAV

d.redeeming shares with stock

 

27.Which of the following is not associated with the growth of mutual funds in recent years?

a.an increasing number of retiring baby boomers

b.a widespread shift from defined contribution to defined benefit retirement plans

c.the increased variety of mutual funds offered

d.the attractive rates of return on common stock

e.All of the above are associated with the growth of mutual funds in recent years.

 

28.The largest investments of mutual funds are _______, followed by_______.

a.bonds; common stocks

b.common stocks; bonds

c.common stocks; preferred stocks

d.money market securities; common stocks

 

29.Which of the following mutual fund types is likely to have the lowest expense ratios?

a.index funds

b.aggressive growth funds

c.growth and income funds

d.international and global equity funds

 

30.Which of the following mutual fund types is likely to have the highest risk exposure?

a.growth and income funds

b.aggressive growth funds

c.balanced funds

d.income-equity funds

e.money market funds

 

 

 

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