The Major Difference Between Active and Passive Mutual Fundsis That

question 92

Multiple Choice

The major difference between active and passive mutual fundsis that:

• A)active funds are classed as mutual funds, but passive funds are not.
• B)active funds involve stock picks by managers, while passive funds involve stock picks by the investors themselves.
• C)active funds are more risky than passive funds.
• D)active funds involve stock picks by managers, while passive funds match the movements of a broad market index.(True
• Answer )Correct

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Definitions:

Bell-Shaped

Describes the graphical shape of a distribution that is symmetrical and has a single peak in the middle, resembling a bell; commonly associated with the normal distribution.

Standard Deviation

An index quantifying the spread or variability among a collection of numbers, where a smaller standard deviation suggests the numbers are closely clustered around the average.

Tchebysheff's Theorem

A statistical theorem stating that, for any real-valued random variable, the proportion of values lying within k standard deviations from the mean is at least 1-1/k^2, for k > 1.

Empirical Rule

A statistical guideline suggesting that within a normal distribution, nearly every data point can be found within three standard deviations of the central mean.