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1.
A fund's number of holdings tells you how much sector risk a fund is taking on.
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False. The number of holdings tells you how much per-issue risk a fund is taking on.
2.
A fund's turnover rate is usually calculated _______.
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Once a year. As a rule, turnover rates are calculated yearly.
3.
Sector weightings in a fund tell you how much price risk a fund is taking on.
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False. Sector weightings tell you the industries your manager favors.
4.
Which stock fund is likely the most volatile?
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A fund with a P/E of 35, 25 holdings, and a 200% turnover rate. The last fund is taking on more price risk (its P/E is higher than the other funds' P/E) and per-issue risk than the others (its number of holdings is smaller), and it is trading more aggressively.
5.
The large differences in size among funds in the "small-cap" section of the Morningstar style box mean that _______.
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Some will outperform others at times. Some funds will perform better than others during market conditions that favor the companies they hold.