Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
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.
3.
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.
4.
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.
5.
Why own an international fund?
Both of the above. Many international funds do well when U.S. funds aren't doing quite as well. As a result, they offer both good return potential and diversification.
