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Funds 406: Using Quirky Bond Funds

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1.
How do bank loan funds' fees compare to the fees of the average bond fund?
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They are higher. Compared to the average bond fund, their fees are higher.
2.
When shopping for a junk-bond fund, credit quality is the feature you should be concerned with.
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True. Credit risk is the big risk with these funds, so an investor should be most concerned with the credit quality of the underlying bonds.
3.
Treasury inflation-protected securities are issued by _______.
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The U.S. government. Because they are issued by Uncle Sam, they are considered very safe.
4.
Why do bank loan funds have high credit risk?
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The loans in the funds are from low-quality companies. Low-quality companies typically carry high risk of default.
5.
Bank loan funds have high _______ risk.
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Credit. Because the loans come from lower-quality borrowers, the credit risk is elevated.