Actively Managed Mutual Funds Usually Fail to Outperform Index Funds

question 152

True/False

Actively managed mutual funds usually fail to outperform index funds, and this fact provides evidence in favor of the efficient markets hypothesis.

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Definitions:

Face Value

The nominal or dollar value printed on a bond, bill, or other financial instrument, indicating its worth at maturity.

Premium

Fee for insurance coverage, usually paid every year by the insured person. The difference between a bond’s par value and its market value when the market value is more. When bonds are sold at a premium, the yield rate will be lower than the stated (face) rate.

Discount

A fee charged when someone buys a note before maturity. With regard to bonds, a bond sells at a discount if the market value becomes less than the face value.

Premium Price

A pricing strategy where goods or services are sold at a higher price point due to perceived advantages, often related to quality or status.