Choose wisely. There is only one correct answer to each question.
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1.
As a rule, which is more volatile?
Stocks. Stocks are more volatile than funds.
2.
If you want to add a little oomph to your mutual fund portfolio, _______.
Add a few stocks at the edges of your portfolio. Adding stocks in small doses can rev up your returns and shouldn't damage the nest egg. An all- stock portfolio will likely have more than a "little" oomph, though.
3.
If you have the resources and want to buy stocks and save on mutual fund expenses, _______.
Assemble a collection of two dozen stable, leading companies that represent a variety of industries and hold them for years to come. If you've put together a truly diverse group of the largest U.S. companies, you'll likely get marketlike results. Active trading will make the strategy less cost effective, because it costs to trade.
4.
Stocks are required to distribute capital gains to their shareholders every year.
False. Mutual funds are required to do this if there are any to distribute, but stocks are not. With stocks, there are no capital gains until the owner sells them for a profit.
5.
Buying a collection of stocks can be cheaper than holding on to a mutual fund because _______.
Both of the above. The nature of the cost structure can benefit stock owners who hold their stocks for long periods.
