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11 February, 19:49

Which of the following statements are true regarding the use of index funds as investment vehiciles for asset classes?

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  1. 11 February, 20:12
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    IV) Index funds are broadly diversified

    Explanation:

    The use of index funds increase diversification since they hold all the securities in the index. By holding all the stocks of the index, the risk lowers (it approaches systematic risk) and the expected returns should be very similar to the expected market returns.
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