Choose wisely. There is only one correct answer to each question.
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1.
Which of the following types of index funds is typically the least tax efficient?
Small-cap index fund. The small-cap funds eventually have to sell stocks that have grown too large for their indexes, and this creates taxable capital gains.
2.
Because index funds are passively managed, we can expect their annual expenses to be very low.
False. Though we should expect that, we unfortunately cannot, as some funds still charge high annual expenses.
3.
Which statement is false?
Index funds are all cheap. Given that index-fund managers aren't actively researching and selecting stocks, all index funds ought to be cheap.
4.
If you see the letters MSCI in an index, you know you are dealing with what category of stocks?
International. The various MSCI indexes track international stocks.
5.
Which of the following types of index funds is usually most tax efficient?
Large-cap index fund. When large-cap funds need to sell stocks that become too small for their indexes, they do create taxable capital gains, but those gains are usually quite small.
