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:

Fixed Manufacturing Overhead

Costs associated with the production process that do not vary with the level of output, such as salaries of managers or rent of the factory building.

Inventories

Materials, work in progress (WIP), and finished goods held by a company to enable production and meet customer demand.

Deferred

Deferred refers to something that is postponed or delayed to a later time, often used in the context of accounting to describe expenses or income.

Absorption Costing

An accounting method that includes all manufacturing costs (direct labor, direct materials, and both variable and fixed overhead) in the cost of a product.