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

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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.
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.
3.
Sector weightings in a fund tell you what?
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What industries your manager favors. If a fund has 50% of its portfolio in the technology sector, for example, half of its performance will be determined by the strength or weakness of that one sector.
4.
A fund's turnover rate is usually calculated _______.
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Once a year. As a rule, turnover rates are calculated yearly.
5.
In the Morningstar style box, all the small-cap funds are the same size.
Choose wisely. There is only one correct answer.
False. The funds vary dramatically in market capitalization; therefore, you should examine the size of each.