AAII

1. Aftertax return should be your number one deciding factor when choosing a fund.

True

False

2. The beta of most stock funds falls in the range of:

–1.0 to 1.0

0.5 to 1.5

0.0 to 2.0

3. The standard deviation captures the fund’s risk from all elements.

True

False

4. Why can large size and rapid growth be a drawback to a fund?

The fund’s expense ratio may rise

The fund may be forced to take on too many investors

The fund may be forced to change its investment strategy

5. How does a fund’s expense ratio affect its performance?

Return figures don’t account for expenses

Higher expenses make it harder for a manager to compete against similar funds in the long run

Expenses are paid quarterly

6. Why is portfolio manager tenure at a fund useful information to know?

The current manager may not be responsible for the fund’s past performance

A new manager brings in a question mark for future fund performance

Both of the above

7. When is a fund’s load not an important factor in choosing between two funds?

When the fund is purchased through a retirement program where the load is waived

When the fund’s performance is much higher than its competitors

When the fund’s expense ratio is low

QUIZ: Choosing the Best Fund for You