Funds Intermediate: Benchmarks for Funds

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1.
Your personal benchmark in investing refers to _______.
Choose wisely. There is only one correct answer.
The yearly return you will need to meet your goal. This figure is what you will aim to match every year you invest for your goal.
2.
Imagine that you have calculated that you need a mutual fund that returns 7% per year for the next 35 years to fund your retirement. What would be a reason NOT to instead choose a fund that returned 8, 9, or even 10% so that you could save extra?
Choose wisely. There is only one correct answer.
There would be a greater risk of loss. The return is greater because the risk is greater. You would be risking your ability to retire in 35 years if you chose the fund with the higher annual return.
3.
Once you've calculated your personal benchmark for investing, choose a fund that _______.
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Usually returns about the same as the benchmark. It's tempting to pick a fund that returns more than you need, but remember: the greater the return, the greater the potential for loss. Be sure the fund you pick has a history of returning as much as your benchmark, or you may not meet your goal.
4.
Which is the best index to use when analyzing a U.S. large-company fund's performance?
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The SP 500 Index. The DJIA is too narrow a benchmark for most large-company funds, and the MSCI EAFE index follows international stocks.
5.
In the world of mutual funds, peer groups are funds that buy the same types of securities that your fund buys.
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True. Their value is that they give you a way to examine your fund's performance.