Ch 8 Mutual Funds & EFT's

What are Mutual Funds?

• Pools of money from investors that fund managers invest

• Similar to a mutual fund but are purchased through a stock exchange

• Uses debt to amplify the return

• Small companies, less than $2 billion in size

What are Value Stocks characterized by?

• Rapidly expanding revenue and profits

• Cheaper prices and higher dividends

• Investing in real estate trusts

• Reducing volatility

What do Sector Funds invest in?

• Small companies

• Specific industries

• Real estate trusts

• Reducing volatility

What are Specialty Funds invested in?

• Real estate trusts and precious metals

• Small companies

• Specific industries

• Reducing volatility

What do Balanced Funds try to maintain?

• A constant percentage of investment in both stocks and bonds

• A high rate of return

• Investment in real estate trusts

• Investment in specific industries

What are Index Funds?

• Pooled investments that passively aim to replicate the returns of market indexes

• Investments in real estate trusts

• Investments in small companies

• Investments in specific industries

What is a recommended strategy for bond investment regarding past performance?

• Ignore past performance

• Reflect on past performance

• Focus only on future predictions

• Avoid experienced funds

What is a way to minimize costs when investing in bonds?

• Stick with inexperienced funds

• Stick with experienced funds

• Avoid index funds

• Invest in high-fee funds

Hybrid funds reduce volatility

• True

• False

When are intermediate bonds best?

• When you need the money in 1 year

• When you don’t need the money for 3-5 years

• When you are in a high tax bracket

• When you are open to volatility