Index Funds Invest in One Specific Type of Investment; for Example

question 201

True/False

Index funds invest in one specific type of investment; for example, an index fund might only invest in income stocks, companies whose stocks pay dividends.

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Definitions:

Debt-to-assets Ratio

A solvency ratio that indicates the percentage of a company's assets financed by debt.

Cost of Equity

The return that a company must earn on the equity-financed portion of its investments to compensate its shareholders for assuming the risk of the investment.

Dividend Growth Rate

The dividend growth rate is a financial metric that measures the annualized percentage rate of growth of a company's dividend payments to its shareholders.