Answer:
Index Funds
Explanation:
An index fund is a stock or bond portfolio designed to replicate a financial sector index's structure and performance. Index funds have reduced costs and fees than the funds that are actively managed.
Index funds pursue a passive method of investment.
The index fund is no secure or unsafer for all purposes than the underlying investments it carries.
Hello. This question is incomplete. The full question is:
"Orlando, a recent graduate of a community college, is about to make his first investment in the stock market. Which of the following would be a cautious way for Orlando to start investing?
a. future contracts in oil, b. index funds, c. short selling tecnology stocks, d. comodity market in precious metal."
Answer:
b. index funds
Explanation:
Index investment funds with quotas traded on the exchange or organized over-the-counter market - known internationally as Exchange Traded Funds - allow investors to adopt new investment strategies. It is the most cautious way for someone who is starting in the world of investments to invest without fear, as is the case with Orlando.
When you purchase an index fund, you “take home” a basket of shares from different companies that together reproduce a certain index, thereby decreasing the likelihood and risk of loss when we choose to trade a particular stock.
In addition, the cost of the transaction becomes lower if we decide to set up the same stock portfolio on our own. This is because in order to invest in the stocks that make up the index, it would be necessary to buy, in due proportions, the components of that index, with the trading costs of each operation.
What's more, to maintain the same position as the index, the investor still has to manage, in a very dynamic way, the proportions of the components of this index.
Another advantage is that the investor can buy or sell his index fund on the secondary market, in the same way he does with his shares, or request the issuance or redemption of index funds, provided that such transactions are made with the securities that make up the theoretical portfolio of that index to which the index fund is linked and according to the specific regulation of each product.
