Choose wisely. There is only one correct answer to each question.
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1.
Which would likely be most volatile?
A Latin America fund. A Latin America fund is both a regional and emerging-markets fund at the same time, and it would therefore be the most volatile of the group.
2.
To find out if a fund owns a lot of emerging-markets stocks, _______.
Examine what countries most of its stocks hail from. Funds with substantial emerging-markets positions may not be categorized as emerging-markets funds. Check the fund's exposure to Latin America and the Pacific Rim to get a sense of how much it invests in emerging markets.
3.
To reduce the possibility of getting uneven returns from an international fund, _______.
Find funds that own stocks from a wide variety of markets. Diversifying will, as a general rule, dampen the danger of uneven returns.
4.
Which of the following is not true about emerging-markets stocks?
They are low risk. Emerging-markets stocks usually behave unlike U.S. stocks and thus can make great diversifiers. They also have the potential to post higher returns. But they're exceptionally high risk.
5.
To choose a good international fund, _______.
Understand how the fund invests. While you should certainly examine a fund's rating and its past returns, you must also understand how the fund invests--the sort of companies it owns and the countries they're from.
