Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
The vertical axis of Morningstar's style box measures a fund's _______.
Credit quality. It is broken into three groups: high, medium, and low.
2.
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.
3.
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.
4.
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.
5.
Which is likely the better bond fund over the long term?
Fund B with a 5% yield and a 6% total return. Fund A is losing its principal (its yield is greater than its total return). Fund C is treading water. Fund B is generating more total return than yield and is thereby increasing its income payouts over time. Always focus on total return, not just yield.
