FA-6.0 Investing Strategies & Exponential Functions REVIEW

1. The S&P 500 is…

• An actively managed mutual fund
• A diverse collection of stocks and bonds
• An index of the 500 largest publicly-traded companies in the world
• An index of the 500 largest publicly-traded companies in the US

2. All of the following are true about robo-advisors, EXCEPT…

• Robo-advisors generally have lower fees than a traditional financial advisor
• Robo-advisors generally have a higher account minimum than a traditional financial advisor
• Robo-advisors use an algorithm to automate the investing process
• Robo-advisors generally invest your portfolio based on your goals and risk tolerance

3. Alberto has decided to invest his retirement money into a mutual fund filled with mid-sized US companies. The fund manager is…

• A CEO at one of those midsize companies
• The person who selects which stocks to include in the fund
• The website where Alberto logs in to check his fund’s value
• The budgeting software Alberto uses to make sure he has enough saved every month

4. All of the following are factors to consider when opening a brokerage account EXCEPT

• Your investing goals
• Who will manage the account
• Fees that will be charged
• The location of the brokerage company

5. Alma recently started investing in a target-date fund with a planned retirement date that is 38 years in the future. How is the portfolio in her TDF most likely allocated?

• Majority stocks and a small percentage of bonds
• Half stocks and half bonds
• Majority bonds and a small percentage of stocks
• Her TDF allocation will depend on the specific securities she selects

6. Which fund will most working American citizens have access to at retirement?

• A traditional IRA
• A Roth IRA
• A pension plan
• Social Security

7. If you invest money into an index fund that tracks the Dow Jones Industrial Average, you would expect…

• A lot of high fees, because there are only 30 companies in that index
• To outperform most other investors because of the elite status of this index
• Your returns to track the performance of 30 large US companies
• Your fund manager to contact you on a regular basis with suggestions on whether to buy or sell

8. Which statement about the investment fees associated with mutual funds is true?

• You’ll pay a one-time fee when you start your investment portfolio with a mutual fund
• You’ll only pay fees to your fund manager if your portfolio has a return over 5%
• Fees are typically set at 10 to 15%, annually, of the amount you have invested
• Fees, compounded over the life of your investment, can substantially decrease your returns

9. Which type of fund is usually passively managed, can be traded throughout the day, and is bought directly from other investors like a stock?

• Mutual fund
• Robo-advisor
• Exchange-traded fund
• Target date fund

10. In 2022, Noah decided to start investing in a target-date fund at Alpine brokerage. They are 24 years old, have been working for 5 years, and are planning on retiring at 67. Which target-date fund should they choose?

• Alpine Target Retirement 2060 Fund
• Alpine Target Retirement 2065 Fund
• Alpine Target Retirement 2070 Fund
• Alpine Target Retirement 2075 Fund