Studies Indicate That the Vanguard 500 Index Fund Tends To

question 5

Multiple Choice

Studies indicate that the Vanguard 500 Index fund tends to:

• A)underperform most professional money managers.
• B)produce a return equal to that of professional managers.
• C)outperform the average professional money manager, but only over the short term.
• D)outperform most professional money managers especially over longer periods of time.
• E)support the argument that the stock market is inefficient.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid, irrespective of when the transactions actually occurred.

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to allocate income and expenditure to the correct periods.

Asset Account

A financial account that represents the resources owned by a company, which have future economic value.

Liability Account

An accounting record that represents debts or obligations a company owes to others.