Index Funds Have Provided Competitive Rates of Return Because

question 13

Multiple Choice

Index funds have provided competitive rates of return because

• A)their costs are lower than other stock funds.
• B)it is difficult to outperform the market.
• C)they have very low turnover rates.
• D)they are tax efficient.
• E)all of these.

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Definitions:

Derivative Security

A financial instrument whose value is based on the price movements of an underlying asset.

Commodity Futures Contract

A standardized contract to buy or sell a particular commodity at a predetermined price at a specified time in the future.

Call Option

An agreement granting the buyer the option to purchase an asset at a predetermined price until the option expires, providing potential profit opportunities from price increases.