Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
For purposes of diversification, which parts of the Morningstar Style Box should attract each other?
Opposite corners. Based on how the style box is structured, opposite corners will show the diversity.
2.
If you have a lot of diversity among individual stocks, what does that say about your diversity in particular sectors of the market?
It can't be determined. A diverse collection of stocks might actually share exposure to certain sectors. Tech is a good example of such a sector.
3.
If you own one fund run by Manager A, how many other funds of his or hers should you own if you value diversification?
None. Managers generally have ingrained investment habits that they apply to every pool of money they run; they'll rarely use a growth strategy on one portfolio and a value strategy on another.
4.
If you own a lot of growth funds, chances are you're overweight in what sector of the market?
Technology. Current growth managers lean toward tech stocks.
5.
Why is portfolio overlap a greater risk for fund investors who also own individual stocks?
Because the investor's funds may also own this stock, making the investor's overall portfolio more concentrated than it seems. That means overlap.
