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LOS c, (Part 3): Explain the rationale for investing in index funds.
Q1. Which of the following statements regarding index funds is least accurate?
A) One disadvantage of index funds is that they do not provide access to international securities.
B) One advantage of index funds is that they allow for diversification that is typically not available to the average individual investor due to a lack of resources.
C) One might conclude from the efficient market literature that an investor should mimic the market's performance and minimize costs by buying index funds.
Q2. Given that markets are efficient, which of the following is least likely to cause an actively managed mutual fund to underperform an index fund?
A) Inferior stock selection.
B) Taxes.
C) Management expenses.
Q3. Assuming that markets are efficient, which of the following statements is FALSE?
A) Investors should not trade often.
B) Investors should buy and hold passively managed index funds.
C) Markets will not be volatile.
Q4. Which of the following is NOT a rationale for investing in index funds?
A) Minimize risk.
B) Active mutual fund managers underperform index funds.
C) Efficient financial markets.
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发表于 2009-3-2 13:29
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