Test your knowledge

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Certificates of deposit are not insured.

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True

False

False. Certificates of deposit are insured.

What is the average duration of a bond in an ultrashort bond fund?

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One year

Six months

One week

Two years

Six months. This is why they are called ultrashort.

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

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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?

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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.

What do bank-loan funds invest in?

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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.

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