Asked by Jayleen Bocanegra on May 10, 2024
Verified
Managed mutual funds perform better on average than index funds because stock prices are usually a good predictor of a company's true value.
Managed Mutual Funds
Investment funds that are professionally managed, allocating collected investor money across various securities like stocks and bonds for a fee.
Index Funds
A type of mutual fund or exchange-traded fund (ETF) designed to track the components of a market index, such as the S&P 500, thereby providing broad market exposure.
Stock Prices
The current market value of a share of a company's stock, determined by the supply and demand in the stock market.
- Differentiate among various financial instruments and understand their functions within the economic system.
Verified Answer
GF
Gissel FierrosMay 11, 2024
Final Answer :
False
Explanation :
Managed mutual funds do not consistently outperform index funds; numerous studies and data show that over the long term, index funds often have better returns, primarily due to their lower fees and the challenge of consistently beating the market through active management.
Learning Objectives
- Differentiate among various financial instruments and understand their functions within the economic system.