An Active Fund Is a Fund That

question 13

Multiple Choice

An active fund is a fund that:

• A) uses stock-picking techniques to buy stocks that are projected to beat market averages.
• B) invests in the most actively traded stocks.
• C) avoids investing in low-return assets, such as bonds and real estate.
• D) is diversified in stocks, bonds, currency, and precious metals.

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Production Sector

A segment of the economy that includes the activities involving the manufacturing and production of goods.

Consumption Sector

Part of the economy that involves the purchase of goods and services by individuals and households.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or the true yield on an investment.