Index funds typically have a

Question

a. lower rate of return and higher costs than managed mutual funds.
b. lower rate of return and lower costs than managed mutual funds.
c. higher rate of return and higher costs than managed mutual funds.
d. higher rate of return and lower costs than managed mutual funds.

Answer 1

The correct answer is:

d. higher rate of return and lower costs than managed mutual funds.

Index funds generally have lower management fees compared to actively managed funds, and they tend to outperform the majority of actively managed funds over the long term due to their lower costs and the difficulty that managers have in consistently beating the market.