When Evaluating a Mutual Fund Prior to Deciding to Invest,you

question 39

Multiple Choice

When evaluating a mutual fund prior to deciding to invest,you should consider

• A) the breadth of the stocks in which the fund is investing.
• B) the industry or industries in which the fund is investing.
• C) performance through the financial crisis in 2008-2010.
• D) both factors in both A and B, above.

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Definitions:

Well-Diversified Portfolio

A collection of investment assets reduced in risk through spreading investments across various securities, sectors, or asset classes.

Single Index Model

A simplification of market models that uses a single factor (usually a market index) to model all securities' returns.

Standard Deviation

A statistical measure representing the dispersion or variability of a set of data points, widely used in finance to quantify the risk associated with a particular investment or portfolio.

Single-Index Model

A model used in finance to describe the returns of a stock portfolio based on the returns of a single market index, simplifying the complexities of the market.