Someone Who Invests in the Vanguard Index 500 Mutual Fund

question 47

Multiple Choice

Someone who invests in the Vanguard Index 500 mutual fund could most accurately be described as using which approach?

• A) Active management
• B) Arbitrage
• C) Fundamental analysis
• D) Passive investment

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Definitions:

Dividend Payments

Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Principal and Interest

The two components of a loan payment; principal is the original amount borrowed, and interest is the charge for borrowing the principal.

Renegotiate Covenants

The act of revising the terms of a loan or bond agreement, often to relax or tighten restrictions on the borrower.

New Accounting Standard

An updated or new rule set by accounting standards bodies that governs the preparation and reporting of financial statements.