Types of Mutual Funds

According to the investment objectives of the Chesapeake Fund, the fund manager may vary the asset mix of the portfolio in response to changing market conditions. Although the fund typically holds a combination of fixed income and equity securities, the fund manager is not restricted by any limitations on asset categories. What type of fund is Chesapeake?

Commodity pool

Balanced

Asset allocation

Index

The manager of the Venture Fund has invested the portfolio as follows: 5% in cash, 40% in fixed income, 30% in Canadian equities, and 25% in foreign equities. The investment objectives of the fund restrict the manager from holding greater than 40% of the fund in foreign equities. He also has to maintain between 40% and 60% of the portfolio in fixed income. What type of mutual fund is the Venture Fund?

Equity fund

Asset allocation fund

Commodity pool

balanced fund

Which of the following is a benefit of investing in open-end mutual funds?

Guaranteed high returns

Exchange traded

Diversification

Principal guarantee

James owns an investment that can mimic the return of the Toronto Stock Exchange (TSX) index. If he wants to sell his investment, he can do so on the TSX. What type of investment does James own?

Canadian index mutual fund

Exchange traded fund (ETF)

Principal protected note

Index futures contract

Kennedy is looking for an investment that will provide her with long-term capital growth. Since she has invested before, Kennedy has a medium to high risk tolerance and wants to now diversify her holdings to include investments outside of Canada. Furthermore, she does not require an income stream from the investment. Which classification of mutual fund would meet Kennedy's requirements?

Mortgage fund

Global equity fund

bond fund

Balanced fund

Diane is a retired widow who wants a monthly income from her mutual fund portfolio. She is concerned about losing money so the ideal investment would be a fairly conservative fund. Which of the following mutual funds can provide a monthly income but is low risk?

Money market fund

Mortgage fund

Balanced fund

Canadian dividend fund

From a general risk and return point of view, which of the following ranks the set of mutual funds from lowest risk/return to highest risk/return?

Money market fund, balanced fund, Canadian equity fund, real property funds

Money market fund, international equity fund, mortgage fund, Japanese equity fund

Bond fund, balanced fund, money market fund, Canadian dividend fund

Asset allocation fund, mortgage fund, commodity pool, global equity fund

Your clients, Ravi and Nuzah Patel, both 30 years of age, recently married. They want to purchase a home in the near future and have already started saving for the down payment. They received $12,000 cash from their wedding and are looking for an investment that provides safety of principal, low risk, and some interest income. They do not want their investment to go down in value since they want the money available if they find the perfect home. Which of the following types of mutual funds meets the criteria?

Money market fund

Bond fund

Canadian equity fund

International equity fund

Which of the following products has the potential to provide protection from creditors?

Segregated funds

Pooled funds

Hedge funds

Income trusts

What is characteristic of a closed-end mutual fund?

The unit price always reflects the fund's underlying net asset value per unit (NAVPU).

They may be listed and sold on a stock exchange.

They may suspend redemptions under certain circumstances.

They make a continuous offering of shares to the public.

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Types of Mutual Funds

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