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Funds Beginner: Introduction to Index Funds

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1.
Index mutual funds try to ________ a particular market index.
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Perform as well as. Index funds choose the securities in a particular index to match its performance.
2.
Why are management expenses in index funds low?
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All of the above. All of these explain why management expenses are low.
3.
Because the securities in index mutual funds are ________, there are few capital gains distributions from them.
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Not traded frequently. They are kept for long periods because their underlying indexes rarely add or drop securities.
4.
Index mutual funds spread their holdings _______ among the securities in a given index.
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Either evenly or unevenly. Index funds can take either approach.
5.
Index mutual funds can outperform the whole market.
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False. Because an index fund is based on a particular measure of the market, it cannot outperform the whole market.