AnswersFL-2102373-Personal Finance and Money Management HonorsBuying and Selling Stock

Mutual Funds Answers

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1
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Rauol made an investment in 155 shares of stock in a load fund for $3,117.05. After one year the stock had a net asset value of $18.35 per share. If Rauol redeems all 155 shares, which of the following is a correct statement?

A
Rauol will have a loss of $272.80.
B
Rauol will have a profit of $272.80.
C
Rauol will have a profit of $2,844.25.
D
There is not enough information to calculate profit or loss.
2
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Mark buys 250 shares of stock in a fund with a net asset value of $25.17 and an offer price of $25.30. Mark wants to sell all of his shares when he can profit $1,000. If Mark sells his shares today, he would have proceeds of $7,300. Determine if Mark should sell his shares today and why.

A
Mark should not sell his shares because he would have a loss rather than a profit.
B
Mark should not sell his shares because he would not have as much profit as he’d like.
C
Mark should sell his shares because he will make the profit he wants to make.
D
There is not enough information given to know if Mark should sell his shares or not.
3

An investor buys 400 shares of stock in a fund when the net asset value is $19.62 and the offer price is $19.84. The investor sells these shares when the net asset value is $43.19 and the offer price is $43.56. Determine the amount of profit the investor earns.

A
$9,576
B
$9,488
C
$9,428
D
$9,340
4

Chyra redeemed 175 shares of stock she owned in the fund shown below.Name of FundNAVOffer PriceCAH Group$15.83$16.27What were Chyra’s proceeds?

A
$77.00
B
$2,770.25
C
$2,847.25
D
$5,617.50
5

Elly buys 75 shares of stock in a mutual fund for a total investment of $450. She sells 50 shares of her stock for total proceeds of $400. Determine if Elly made a profit or loss, and how much per share.

A
loss of $0.67 per share
B
loss of $2 per share
C
profit of $0.67 per share
D
profit of $2 per share
6

Rochelle invests in 500 shares of stock in the fund shown below.Name of FundNAVOffer PriceHAT Mid-Cap$18.94$19.14Rochelle plans to sell all of her shares when she can profit $6,250. What must the net asset value be in order for Rochelle to sell?

A
$12.50
B
$31.44
C
$31.64
D
$100.00
7

Why is too much diversification considered a negative thing when dealing in a mutual funds?

A
Higher diversification means that the mutual fund costs a lot more and doesn’t provide as much profit.
B
When there is too much diversification in a mutual fund, great success in a single stock doesn’t make much of a difference in the overall progress of the fund.
C
If there are too many different investments, it would be too hard to keep track of them and some would inevitably get lost in the system.
D
Greater diversification means a drastic increase in taxes, so most companies avoid overly diversifying the mutual fund.
8

Use the information in the table below to answer the following question.Name of FundNAVOffer PriceUpton Group$18.47$18.96Green Energy$17.29$18.01TJH Small-Cap$18.43$19.05WHI Health$20.96NLTrevor buys 80 shares of Upton Group and 70 shares of TJH Small-Cap. What is Trevor’s total investment?

A
$2,687.90
B
$2,768.00
C
$2,850.30
D
$2,957.60
9

A married couple buys 280 shares of stock for a total investment of $8,722. They decide to sell all of their shares in the fund at the listing value shown below.Name of FundNAVOffer PriceCEH Mid-Cap$31.05$31.20Determine if the couple makes a profit or loss, and how much per share.

A
loss of $0.05 per share
B
loss of $0.10 per share
C
profit of $0.05 per share
D
profit of $0.10 per share
10

Use the information in the table below to answer the following question.Name of FundNAVOffer PriceUpton Group$18.47$18.96Green Energy$17.29$18.01TJH Small-Cap$18.43$19.05WHI Health$20.96NLFor which of the funds shown would you pay the most commission on the purchase of 100 shares?

A
Green Energy
B
TJH Small-Cap
C
Upton Group
D
WHI Health
11

Which of the following expressions is equal to the total proceeds of a mutual fund?

A
net assets times number of shares
B
net asset value times number of shares
C
offer price times number of shares
D
profit minus investment
12

A certain mutual fund has net assets of $1,359,600. One share of this fund has a net asset value of $11.33. How many shares make up the fund?

A
833
B
120,000
C
1,359,600
D
15,404,268
13

Why would a mutual fund, a collection of stocks, bonds, and other securities, have less risk than investing in stocks alone?

A
Stocks are higher risk than most other securities in a mutual fund, but when averaged with the risk of the other securities, mutual fund risk is not as high as stock risk.
B
Mutual funds are controlled primarily by their investors, and those investors would do anything they could to keep their mutual fund from decreasing in value.
C
Because mutual funds eliminate the middle man, there is far less room for error and higher chance for greater profit.
D
Mutual funds, by nature, are a mutual agreement between company and investor, and failure to comply on either side presents reprecussions, the fear of which lowers the risk of the investment.
14

Which of the following describes how to calculate the total investment in a load fund?

A
Multiply the number of shares by the net asset value.
B
Multiply the number of shares by the offer price.
C
Subtract the net asset value from the offer price.
D
Subtract the proceeds from the investments.
15

Use the information in the table below to answer the following question.Name of FundNAVOffer PriceUpton Group$18.47$18.96Green Energy$17.29$18.01TJH Small-Cap$18.43$19.05WHI Health$20.96NLTracy buys 150 shares of Upton Group and 100 shares of WHI Health. What is Tracy’s total investment?

A
$4,940.00
B
$5,040.00
C
$5,914.50
D
$5,988.00
16

A mutual fund has total assets of 2.4 million dollars and 300,000 shares. What is the net asset value of one share of the fund?

A
$0.08
B
$0.80
C
$8.00
D
$80.00

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