Which of the Following Is True

question 620

Multiple Choice

Which of the following is true?

• A) Managed equity funds generally outperform indexed equity mutual funds.
• B) Managed equity funds merely hold stocks in the same proportion they are represented in a broad stock market index such as the Standard & Poor's 500.
• C) Indexed equity funds generally have lower management and operating costs than managed funds.
• D) Indexed equity funds generally engage in more stock trading than managed funds.

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Definitions:

Stock Price

The cost of purchasing a share of a company's stock, reflecting the market's valuation of the company at any given time.

Call Option

A contract which allows an investor the option, without being required, to purchase a stock, bond, commodity, or any other financial instrument at a predetermined price during a certain time frame.

Exercise Price

The specified price at which the holder of an option can buy or sell the underlying asset.

Stock Price

The cost of purchasing a share of a company's stock, determined by supply and demand in the market.