The key idea behind constructing an index fund is to choose a portfolio of securities that
A)is a mix of growth- and income-oriented stocks.
B)minimizes risk without sacrificing liquidity.
C)mimics the performance of a broad market index.
D)balances short- and long-term investments.

Question

Quizplus · Accepted Answer

The key idea behind constructing an index fund is to replicate or mimic the performance of a particular market index. Therefore, choice C is the best answer. Choices A, B, and D are not specific to index funds and do not address the central concept of an index fund.

The Key Idea Behind Constructing an Index Fund Is to Choose