Which of the Following Is an Advantage of an Indexed

question 72

Multiple Choice

Which of the following is an advantage of an indexed equity mutual fund relative to a managed equity fund?

• A) Indexed funds generally have better stock pickers.
• B) Indexed funds engage in more detailed research.
• C) Indexed funds have lower operating costs because they engage in less stock trading.
• D) Indexed funds earn a significantly higher rate of return than a broad portfolio that represents the entire stock market.

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Definitions:

Heuristic

is a mental shortcut that allows people to solve problems and make judgments quickly and efficiently, often based on previous experiences.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses, while giving disproportionately less consideration to alternative possibilities.

High-quality Cosmetics

Beauty products that are manufactured with superior ingredients, offering better performance, longevity, and safety for the user.

Cognition

Acquiring insight and knowledge through the processes of thinking, undergoing experiences, and using the senses.