When talking about investing, what does it mean when someone refers to a fund? A) An amount someone has in their checking account B) A way to crowdsource money from people online to help pay for an expense C) A type of savings account that you can use for emergency expenses D) A pool of money from shareholders that is used to invest in a collection of assets like stocks and bonds The goal of an actively managed fund is to outperform the market. What does this mean? A) The fund will match the overall return of the market B) The fund is managed by a fund manager, who tries to beat the overall market's rate of return C) The fund is guaranteed to provide a rate of return that is lower than the overall market D) If the actively managed fund does not beat the market, the fund manager will pay you the difference All of the following are true about a passively managed fund EXCEPT... A) Passively managed funds are managed by a fund manager B) Passively managed funds are generally seen as low risk investments C) Fees for a passively managed fund are typically lower than those for an actively managed fund D) A passively managed fund seeks to match the average return of the securities it includes

Sure, let's go through each of your questions one by one and identify the correct answers along with explanations. --- ### **1. When talking about investing, what does it mean when someone refers to a fund?** **Options:** - **A)** An amount someone has in their checking account - **B)** A way to crowdsource money from people online to help pay for an expense - **C)** A type of savings account that you can use for emergency expenses - **D)** A pool of money from shareholders that is used to invest in a collection of assets like stocks and bonds ****_Answer: D)_** **_Explanation:_** In investing, a **fund** refers to a collective pool of money gathered from multiple investors (shareholders) that is managed by professionals. This pooled money is then invested in a variety of assets such as stocks, bonds, real estate, or other securities. Examples include mutual funds, exchange-traded funds (ETFs), and hedge funds. --- ### **2. The goal of an actively managed fund is to outperform the market. What does this mean?** **Options:** - **A)** The fund will match the overall return of the market - **B)** The fund is managed by a fund manager, who tries to beat the overall market's rate of return - **C)** The fund is guaranteed to provide a rate of return that is lower than the overall market - **D)** If the actively managed fund does not beat the market, the fund manager will pay you the difference ****_Answer: B)_** **_Explanation:_** An **actively managed fund** employs a fund manager or a team of managers who make specific investments with the goal of outperforming a benchmark index or the overall market. This involves research, analysis, and strategic decision-making to select securities that they believe will perform better than the market average. Unlike passive funds, which aim to match market performance, active funds seek to exceed it. - **Option A** describes a **passively managed fund**. - **Option C** is incorrect as there's no guarantee of lower returns. - **Option D** is inaccurate because fund managers do not compensate investors for underperformance. --- ### **3. All of the following are true about a passively managed fund EXCEPT...** **Options:** - **A)** Passively managed funds are managed by a fund manager - **B)** Passively managed funds are generally seen as low risk investments - **C)** Fees for a passively managed fund are typically lower than those for an actively managed fund - **D)** A passively managed fund seeks to match the average return of the securities it includes ****_Answer: A)_** **_Explanation:_** **Passively managed funds** aim to replicate the performance of a specific market index (like the S&P 500) rather than trying to outperform it. Here's a breakdown of each option: - **Option A** is **incorrect** in the context of the question. While passively managed funds do have managers, their role is minimal compared to active funds. They primarily follow a set strategy to mirror an index, rather than making active investment decisions. Therefore, saying they are "managed by a fund manager" might imply active management, which is not the case. - **Option B** is generally **true** because passive funds often hold a diversified portfolio that mirrors the market index, which can reduce risk through diversification. - **Option C** is **true** as passively managed funds typically have lower fees due to reduced managerial involvement and lower transaction costs. - **Option D** is **true** because the primary objective of passively managed funds is to match the performance of their benchmark index. Therefore, **Option A** is the statement that is **not true** about passively managed funds in the context provided. --- I hope this clarifies your queries about investment funds and their management!