In an index fund

Question

In an index fund

Quizplus · Accepted Answer

An index fund is a type of mutual fund that aims to track the performance of a specific market index, such as the S&P 500 or Dow Jones Industrial Average. The fund invests in a portfolio of stocks that are included in that index, with the goal of achieving returns that are similar to the index itself. Therefore, Choice B accurately describes what an index fund is and how it works.

Choices A, C, and D are not accurate descriptions of index funds. Choice A refers to inflation-adjusted returns, which may or may not be applicable depending on the specific fund. Choice C suggests that investors are guaranteed returns, which is not the case with any type of investment. Choice D implies that high fees are charged in attempts to beat the market, which is not a feature of index funds as they are designed to match, rather than beat, a specific market index.

In an Index Fund