Funds Beginner: Introduction to Index Funds

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1.
Index funds buy an equal number of shares of each security in their chosen index.
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False. Many of them buy more or fewer of a particular security.
2.
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.
3.
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.
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.
The fact that index funds are actively managed accounts for their relatively low management expenses.
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False. Active management would increase management expenses. Computers manage most index funds, thus making them passively managed.