Investing Review 4 Risk

Which means to reduce risk from only making one investment?

• dollar cost averaging

• diversification

• debt consolidation

• Derivative Investing

What are the advantages of investing in mutual funds?

• Lower share price

• Diversification

• Guaranteed Returns

• No Risk

If one wishes to purchase index funds, they use

• active investing.

• passive investing.

• only the NASDAQ.

• only the NYSE.

Who manages an index fund?

• The shareholders

• The brokers in charge of that fund.

• Chair of the Federal Open Market Committee

• No One

What is an index?

• A measurement of a stock’s volatility compared to the overall market.

• The marketplace for buying and selling stock.

• An investment mutual fund that trades like a stock on the stock market exchange.

• A measure, or indicator, of the stock market often used as a comparison tool of market performance.

Ninety percent of actively managed funds underperformed their relative indices. What are two reasons it is difficult for fund managers to “beat the market?”

• Dividends

• Lack of education

• Lack of experience

• Inability to predict the market

What is an index fund?

• A mutual fund in which a manager or management team makes decisions about how to invest the fund’s money.

• A type of mutual fund with a portfolio constructed to match or track the components of a financial market index.

• A professionally managed mutual fund that invests in a variety of bond types of various risk levels.

• A federally insured savings account that has a fixed interest rate and fixed date of withdrawal.

Who created the first index fund in 1975?

• John Vanguard

• Bill Gates

• Warren Buffett

• John Bogel

Which is the best definition of a mutual fund?

• A mutual fund is a lending investment where you lend an organization a set amount of money and are paid interest payments on that loan.

• A mutual fund is a piece of ownership on one company.

• A mutual fund is an FDIC insured investment that pays a fixed amount of interest over a fixed period of time.

• A mutual fund is a professionally managed investment that pools money together with other investors to purchase a collection of stocks, bonds, or other securities.

What is the average annual expense ratio for a mutual fund?

• 0% - 25%

• 0.1% - 2% 

• 0.1% - 0.5%

• 10% - 20%