AAII

1. Why is it dangerous to invest in the current top-performing stock fund?

Top performers never stay on the top of the list

Top performers usually become bottom performers in the next period

The fund may have taken on more risk to distinguish it from other funds

2. When do long-term bond funds show up on top-performing lists?

When a large percentage of the bonds in the fund are reaching maturity

When interest rates are heading down

When interest rates are heading up

3. What determines if a fund’s size will hinder its performance?

The investment objective of the fund

The fund’s portfolio manager

The fund’s expense ratio

4. When is a fund’s expense ratio too large?

When it’s higher than the average for the fund’s category

When it’s above 1.00%

When it’s 50% more than the average for all funds

5. Why should you steer clear of load funds?

Loads pay for marketing only

Loads reduce your return

Load funds underperform no-load funds on average by the amount of the load

All of the above

6. What makes a good actively managed stock fund?

Ability to move in and out of the market at the right time

Ability to wisely choose the industries and stocks to invest in

Ability to attract investors

QUIZ: Choosing the Best Fund for You