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1.
Whats the biggest risk with bank-loan funds?
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Borrowers defaulting. Because they invest in floating-rate loans, bank-loan funds have very little interest-rate risk.
2.
What is the average duration of a bond in an ultrashort bond fund?
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Six months. This is why they are called ultrashort.
3.
Certificates of deposit are not insured.
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False. Certificates of deposit are insured.
4.
For many, a disadvantage of certificates of deposit is that _______.
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You must hold them for a set period. There are early-withdrawal penalties if you take your money out early.
5.
Bank-loan funds have very little interest-rate risk to worry about.
Choose wisely. There is only one correct answer.
True. Because they invest in floating-rate loans, bank-loan funds have very little interest-rate risk.