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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.
Choose wisely. There is only one correct answer.
False. The number of holdings tells you how much per-issue risk a fund is taking on.
2.
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.
3.
A fund's turnover rate tells you what?
Choose wisely. There is only one correct answer.
How frequently the manager trades the portfolio. Buy-and-hold managers will have lower turnover rates than managers who buy and sell stocks on short-term factors.
4.
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.
5.
Sector weightings in a fund tell you what?
Choose wisely. There is only one correct answer.
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.