In an Index Fund

question 16

Multiple Choice

In an index fund,

• A)returns are adjusted for changes in the consumer price index.
• B)funds are invested in a mutual fund that attempts to replicate the performance of a major market index.
• C)investors are guaranteed returns equal to a major market index.
• D)high commissions and management fees are charged because of attempts to beat the market.

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Definitions:

Capital Gains

Capital gains are the profits realized from the sale of assets, such as stocks or real estate, when the selling price exceeds the original purchase price.

Significant Influence

A level of power that allows an entity to affect the decision-making of another entity without full control, often associated with ownership of a significant but not majority share percentage.

Significantly Influenced

A situation where an entity has a notable but not controlling interest in another entity, impacting its financial and operating policies.

Associate

An entity in which an investing entity has significant influence, typically through owning a substantial but not majority shareholding, usually between 20% and 50%.