Choose wisely. There is only one correct answer to each question.
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1.
If you want to use sector funds to invest in a long-term trend, what strategy would be wise to use?
Dollar cost averaging. This is an effective way to get into a trend slowly and carefully, especially if you are fairly new at it.
2.
Why would redemption fees be good for a long-term investor in a sector fund?
They are eventually paid to investors who remain in the fund. Redemption fees are paid by investors who leave the fund early, and they are paid back into the fund.
3.
Why would you want to know how diversified a sector fund is?
The fund may be highly concentrated in certain subsectors; this will affect its performance. Some subsectors are quite volatile.
4.
An investor with an already well-diversified portfolio might want to buy sector funds anyway. Which of the following would not be a reason for that investor to do so?
None of the above. All of these are reasons why an investor with a diversified portfolio might want to buy into sector funds anyway.
5.
A well-diversified portfolio doesn't need sector funds.
True. A well-diversified portfolio likely covers several different sectors already. But although it doesn't need them, you can still use sector funds for additional diversification.
