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

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1.
Price/earnings multiples tell you what?
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How much price risk a fund is taking on. The greater a fund's price/earnings multiple, the greater its price risk.
2.
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.
3.
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.
4.
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.
5.
In the Morningstar style box, all the small-cap funds are the same size.
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False. The funds vary dramatically in market capitalization; therefore, you should examine the size of each.