WorksheetsInvesting Bell Ringer 6-7
Total questions: 10
Worksheet time: 5mins
When talking about investing, what does it mean when someone refers to a fund?
A type of savings account that you can use for emergency expenses
A pool of money from shareholders that is used to invest in a collection of assets like stocks and bonds
A way to crowdsource money from people online to help pay for an expense
An amount someone has in their checking account
The goal of an actively managed fund is to outperform the market. What does this mean?
The fund is guaranteed to provide a rate of return that is lower than the overall market
The fund will match the overall return of the market
The fund is managed by a fund manager, who tries to beat the overall market’s rate of return
If the actively managed fund does not beat the market, the fund manager will pay you the difference
All of the following are true about a passively managed fund EXCEPT…
Fees for a passively managed fund are typically lower than those for an actively managed fund
Passively managed funds are generally seen as low risk investments
A passively managed fund seeks to match the average return of the securities it includes
Passively managed funds are managed by a fund manager
Geraldo reviews his brokerage statement and sees the following two mutual fund investments that he made a year ago. ActiveFund20 had an average return (before fees) of 7.0% per year and an annual fee of 1%. PassiveFund500 had an average return (before fees) of 6.5% per year and an annual fee of 0.1%. Which investment had a better return for Geraldo (net of fees)?
ActiveFund20: It had an overall return of 8.0% while PassiveFund500 had an overall return of 6.6%
PassiveFund500: It had an overall return of 6.6% while ActiveFund20 had an overall return of 8%
ActiveFund20: It had an overall return of 7.0% while PassiveFund500 had an overall return of 6.5%
PassiveFund500: It had an overall return of 6.4% while ActiveFund20 had an overall return of 6.0%
Why are Index Funds such a popular investing option?
They are a mix of 2-3 individual stocks that can help you diversify your portfolio
They provide a low-cost, diversified investment option that closely matches the overall return of a given index, such as the S&P 500
They are actively managed by a fund manager
They are managed by robo-advisors that guarantee higher returns than the overall stock market
Which of the following statements about Exchange Traded Funds (ETFs) is TRUE?
ETFs are traded once a day after the market closes
An ETF is a single stock that you can buy in the stock market
Actively managed ETFs have very low fees
ETF prices can change throughout the day as they are exchanged on the market
I am actively managed and usually come with higher fees. Which investment am I?
Mutual Fund
Index Fund
ETF
TDF
I am best for beginner investors who want to build their retirement fund. I don't require much work as an investor and am often referred to as a set-it-and-forget-it fund. Which investment am I?
Mutual Fund
Index Fund
ETF
TDF
I am passively managed and usually come with lower fees. Which investment am I?
Mutual Fund
Index Fund
ETF
TDF
I can be bought and sold throughout the day. Which investment am I?
Mutual Fund
Index Fund
ETF
TDF
