Test your knowledge

Choose wisely. There is only one correct answer to each question.

Keep studying!

Review your answers below to learn more.

What do bank-loan funds invest in?

Choose wisely. There is only one correct answer.

Bank loans taken on by corporations

Loans taken out by individuals

Government loans

Stocks

Bank loans taken on by corporations. The funds choose floating-rate bank loans.

Bank-loan funds have very little interest-rate risk to worry about.

Choose wisely. There is only one correct answer.

True

False

True. Because they invest in floating-rate loans, bank-loan funds have very little interest-rate risk.

Whats the biggest risk with bank-loan funds?

Choose wisely. There is only one correct answer.

There isnt any.

Interest-rate risk

Borrowers defaulting

Borrowers defaulting. Because they invest in floating-rate loans, bank-loan funds have very little interest-rate risk.

Certificates of deposit are not insured.

Choose wisely. There is only one correct answer.

True

False

False. Certificates of deposit are insured.

How do ultrashort-bond funds limit risk?

Choose wisely. There is only one correct answer.

They all invest in short-term securities, typically with durations of six months or less.

They only invest in high-quality credits.

Theyre insured.

They all invest in short-term securities, typically with durations of six months or less. Not all ultrashort-bond funds stick exclusively with high-quality securities. And they are not insured.

© Copyright 2024 Morningstar, Inc. All rights reserved. Morningstar, the Morningstar logo, Morningstar.com, Morningstar Tools are either trademark or service marks of Morningstar, Inc. In addition, we encourage you to read this important disclosure.