The Tracking Error on an Index Mutual Fund Refers to How

question 15

True/False

The tracking error on an index mutual fund refers to how closely an index fund mirrors the movements of the index it represents.

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Definitions:

Least-significant Bit

The bit in a binary number which represents the smallest possible value (typically the rightmost bit), determining the unit's place in the overall value.

Bit Shift Left

An operation in binary arithmetic where the bits of a binary number are shifted one or more places to the left, effectively multiplying the number by a power of two.

Reserve Ratio

The fraction of depositors' balances banks must hold in reserve and not lend out.

Excess Reserves

Funds that banks hold over and above the legal reserve requirement set by central banking authorities.