Asked by Grace Carroll on Jun 05, 2024
Verified
Someone who invests in the Vanguard Index 500 mutual fund could most accurately be described as using which approach?
A) Active management
B) Arbitrage
C) Fundamental analysis
D) Passive investment
Vanguard Index 500
A mutual fund that aims to mirror the performance of the S&P 500, managed by Vanguard.
Passive Investment
An investment strategy involving minimal buying and selling, aiming to benefit from long-term market returns with low fees.
- Elucidate on the core principles and approaches concerning passive as opposed to active investment management, with an emphasis on portfolio diversification and the responsibilities of portfolio managers.
Verified Answer
SS
Sailesh SharmaJun 09, 2024
Final Answer :
D
Explanation :
Investing in a Vanguard Index 500 mutual fund follows a passive investment approach, where investors aim to replicate market returns by buying a diversified portfolio with low fees and a long-term investment horizon. Vanguard Index 500 mutual fund tracks the performance of the S&P 500 index, which comprises of 500 large-cap U.S. stocks, offering broad market exposure.
Learning Objectives
- Elucidate on the core principles and approaches concerning passive as opposed to active investment management, with an emphasis on portfolio diversification and the responsibilities of portfolio managers.
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