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1.
Which is least important when evaluating bond funds?
Their yields. Yield is nothing more than a percentage of principal, so it's more important to examine a fund's total return than its yield. Further, expenses are perhaps the most important factor to consider when investing in bond funds.
2.
The horizontal axis of Morningstar's fixed-income style box measures a fund's ______.
Interest-rate sensitivity. It measures interest-rate sensitivity as measured by the average duration of all the bonds in its portfolio.
3.
Bond funds with high expense ratios _______.
Both of the above. To overcome high expenses, bond fund managers generally take on more risk to keep their yields and returns competitive.
4.
Morningstar's fixed-income style box visually depicts a fund's _______.
Credit quality and duration. While examining total return and expenses is important, our style boxes show the characteristics of the securities that funds own--in this case, duration and credit quality.
5.
The vertical axis of Morningstar's style box measures a fund's _______.
Credit quality. It is broken into three groups: high, medium, and low.
