You Are Considering Investing in a No-Load Mutual Fund That

question 26

Multiple Choice

You are considering investing in a no-load mutual fund that focuses on growth stocks or in an index fund based on the TSX.The growth stocks fund had a five year average annual return of 11 percent with MER of 2.6 percent.The index fund had a five year average annual return of 11 percent with MER of 1.1 percent.Assuming equal risk,you should buy

• A)the index fund because it has a lower MER.
• B)the growth fund because its portfolio performed better.
• C)some of both,for diversification,as they performed equally.
• D)neither,because the expenses are too high for funds of this type.

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Definitions:

Expansion Slots

Slots on a motherboard that allow for the addition of expansion cards to provide additional functionality, such as video processing or additional ports.

Memory

The part of a computer that temporarily stores applications, user documents, and system operating information.

Ports

Physical or virtual connection points used by computers and networking devices to connect to one another and exchange data.

Adapter

A device or electronic component that allows one hardware or electronic interface to be adapted or converted to another without loss of functionality.