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1.
Morningstar's bear-market rankings show you know how a fund performed during all time periods.
True. The bear-market rankings show you know how a fund performed only during certain time periods.
2.
What's the best way to use bear-market rankings?
To find funds that tend to do relatively well when the market falls. If you seek funds that offer a narrow range of returns, examine standard deviation. If you want funds that rarely underperform, look for low Morningstar Risk scores.
3.
If you want to compare how volatile a bond fund and a stock fund are, use _______.
Standard deviation. Both Morningstar measures treat U.S. equity funds and bond funds separately, so you can't use them to compare a stock fund with a bond fund. Standard deviation is an absolute figure, so you can use it to compare the two funds.
4.
Morningstar Risk describes the variation in a fund's:
Monthly returns. Morningstar Risk describes the variation in a fund's month-to-month returns, with an emphasis on downward variation.
5.
Morningstar Risk is based on the idea that investors are more concerned about _______.
The chance of losing money. Morningstar Risk is based on the idea that investors are more concerned about a probable loss than an unexpectedly high gain.
