The Initial Cost of Investing in Mutual Funds Depends in Part

question 207

Multiple Choice

The initial cost of investing in mutual funds depends in part on

• A) whether the fund is a load or no-load fund.
• B) the risk tolerance of the companies in the fund.
• C) the tax rate on capital gains.
• D) the imposition of government tariffs.

---

Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta above 1 indicates that the stock is more volatile than the market, while a beta below 1 indicates it is less volatile.

Unadjusted Beta

Unadjusted beta is the raw beta value of a security or portfolio without any adjustments for its specific risks and characteristics, typically used as a measure of its volatility against the market.

Adjusted Betas

Betas that have been modified to account for the tendency of a stock's market risk measure to regress towards the mean over time, used in finance to predict future betas.

Market Index

A statistical aggregate that measures the performance of a basket of stocks to represent a particular market or sector.