A Comparison of Historical Performance of Mutual Funds and the S&P

question 41

Multiple Choice

A comparison of historical performance of mutual funds and the S&P 500 suggests that:

• A) most mutual funds consistently outperform the S&P 500.
• B) active funds consistently outperform the S&P 500, and passive funds consistently underperform the S&P 500.
• C) mutual funds outperform the S&P 500 when they are undervalued.
• D) mutual funds on average underperform the S&P 500 at least half of the time.

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Definitions:

Carrying Amount

The value of an asset or liability according to a company's balance sheet, factoring in depreciation or amortization.

Unamortized Discount

The portion of a bond discount that has not yet been expensed to interest expense over the bond's life.

Face Value

The nominal value printed on a financial instrument, like a bond or stock certificate, representing its worth at issuance or maturity.

Interest Payments

Payments made to lenders as compensation for borrowing money, typically calculated as a percentage of the principal amount.