The following questions are about mutual funds:
i. What are index funds?
ii. What is an expense ratio? How do expense ratios affect the value of an investor's portfolio?
i. An index fund is a mutual fund that is passively managed, which means that the mutual fund manager simply tries to track the return of an index, like the Standard & Poor's 500 stock index.
A-head: INVESTMENT ACCOUNTS
Concept:Mutual funds
ii. Expense ratios are annual fees charged by mutual funds in order to pay mutual fund managers and to pay other record-keeping and marketing costs of the fund. Expense ratios make a very big difference in the long-run performance of investments. Paying an annual fee of even 1 percent will reduce the annual rate of return on the investment from say, 10 percent to 10 – 1 = 9 percent.
A-head: INVESTMENT ACCOUNTS; CHOICE AND CONSEQUENCE: OVERLOOKING FEES
Concept: Expense ratios
You might also like to view...
Contractionary monetary policy shifts the reserve supply schedule inward
a. True b. False Indicate whether the statement is true or false
A monopolistically competitive market could be considered inefficient because
a. marginal revenue exceeds average revenue. b. price exceeds marginal cost. c. the efficient scale of production is only achieved in the long run, not in the short run. d. markup pricing does not occur in any other market structure.
Which statement best explains why demand for gasoline is inelastic?
a. Gasoline prices are currently very high. a. There is no substitute available c. Gasoline uses a small portion of a person's income. d. People have already cut back their driving to the minimum.
The Social Security Fund is designed as
A. an account that allows periodic withdrawals by contributors. B. a pay-as-you-go system. C. an individual account with a federal reserve bank. D. an investment portfolio that individual contributors can make periodic payments into.