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Funds 208: Examining a Stock Fund's Portfolio: Style Box Statistics

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1.
Price risk is the risk that securities will be overvalued by the market.
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True. Price risk can be illustrated with price/earnings and price/book ratios.
2.
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.
3.
In the language of sector investing, the stock 'super-sectors' are divided into _______.
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Cyclical, sensitive, and defensive. Each of these super-sectors breaks down into smaller ones.
4.
A fund's turnover rate tells you how frequently the manager trades the portfolio.
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True. Buy-and-hold managers will have lower turnover rates than managers who buy and sell stocks on short-term factors.
5.
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.