Understanding Mutual Funds

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Show your work for each problem.

1.
What does a mutual fund do with investors' money?
1. a)Stores it in a vault
2. b)Gives it to the government
3. c)Pools it to buy diversified investments
4. d)Keeps it in a savings account
2.
A fund has total assets of 20 million euros and liabilities of 2 million euros with 2 million shares. What is the NAV per share?
3.
What is an expense ratio?
1. a)The number of stocks in the fund
2. b)The minimum investment amount
3. c)The annual fee charged as a percentage of your investment
4. d)The profit you earn from the fund
4.
You invest 5,000 euros in a fund with a 2% expense ratio. How much do you pay in annual fees?
5.
What is diversification?
1. a)Putting all money in one stock
2. b)Keeping money in cash
3. c)Only investing in bonds
4. d)Spreading investments across different assets to reduce risk
6.
A fund has 80 million euros in assets, 5 million in liabilities, and 5 million shares. Calculate the NAV per share.
7.
You invest 25,000 euros in a fund with a 1.2% expense ratio. How much do you pay in fees per year?
8.
Fund A has a NAV of 10 euros and grew 15% last year. Fund B has a NAV of 50 euros and grew 8% last year. Which fund performed better?
1. a)Cannot be determined
2. b)Fund B (higher NAV)
3. c)They performed equally
4. d)Fund A (15% growth)
9.
You bought 100 shares at 20 euros each. After a year, the NAV is 23 euros. What is your percentage return?
10.
How many shares can you buy with 3,000 euros if the NAV is 15 euros per share?
11.
You bought 150 shares at 40 euros each. After a year, the NAV is 44 euros and you received 1.20 euros dividend per share. What is your total return in euros?
12.
You invested 10,000 euros. After one year, your investment is worth 11,200 euros. The fund paid 200 euros in dividends. What is your total return percentage?
13.
A fund charges 0.8% expense ratio. If you invest 50,000 euros for 5 years (with no growth), how much total do you pay in fees?
14.
Fund X has expense ratio 0.1% and returned 9.5% last year. Fund Y has expense ratio 1.5% and returned 10.5% last year. After expenses, which had higher net return?
1. a)Fund X (9.4% net return)
2. b)Fund Y (9.0% net return)
3. c)They had equal net returns
4. d)Cannot be determined
15.
A fund's NAV was 25 euros at the start of the year and 30 euros at the end. It paid 1 euro dividend per share. What is the total return percentage?
16.
An index fund charges 0.05% expense ratio. An actively managed fund charges 1.25%. On a 100,000 euro investment, how much more do you pay in annual fees with the active fund?
17.
A fund has assets of 120 million euros and 8 million shares. If the fund receives 10 million euros in new investments and issues 500,000 new shares, what is the new NAV?