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1.
A fund's number of holdings tells you what?
How much per-issue risk a fund is taking on. Funds with fewer holdings are more vulnerable to troubles in one or two stocks than funds with more holdings are. Sector weightings reveal a fund's sector risk, while P/E and P/B ratios relative to a fund's peers reflect price risk.
2.
Price risk is the risk that securities will cost too much.
False. Price risk is the risk that securities will be overvalued by the market.
3.
In the Morningstar style box, all the small-cap funds are the same size.
False. The funds vary dramatically in market capitalization; therefore, you should examine the size of each.
4.
A fund's turnover rate is usually calculated _______.
Once a year. As a rule, turnover rates are calculated yearly.
5.
In the language of sector investing, the stock 'super-sectors' are divided into _______.
Cyclical, sensitive, and defensive. Each of these super-sectors breaks down into smaller ones.
