An index fund
A) is a bond fund that provides diversification.
B) is a mutual fund that buys the stocks that compose a well-known index.
C) is a growth fund that reduces transaction costs.
D) produces information on the securities it invests in.

Question

Quizplus · Accepted Answer

An index fund is a mutual fund that buys the stocks that compose a well-known index, such as the S&P 500. It provides diversification and usually has lower expenses and fees compared to actively managed funds.

An Index Fund