Let's evaluate each statement:
a. Mutual funds are riskier than single stock purchases because the performance of so many different firms can affect the return of a mutual fund.
- This statement is generally false. Mutual funds typically decrease risk through diversification, as they spread investments across numerous stocks or assets, whereas purchasing a single stock carries the risk associated with that one company's performance.
b. Longer-term bonds tend to pay less interest than shorter-term bonds.
- This statement is generally false. Typically, longer-term bonds tend to pay a higher interest rate (yield) than shorter-term bonds to compensate investors for holding money longer and taking on more interest rate risk.
c. A stock index is a directory used to locate information about selected stocks.
- This statement is misleading. A stock index is not a directory; rather, it is a statistical measure that represents the performance of a group of stocks, often providing insight into the overall market performance or specific sectors.
d. Municipal bonds pay less interest than comparable corporate bonds.
- This statement is generally true. Municipal bonds often pay lower interest rates than corporate bonds because they are typically exempt from federal income taxes and sometimes state and local taxes, making them more attractive to certain investors.
Based on this analysis, the true statement is d. Municipal bonds pay less interest than comparable corporate bonds.