24
QuizMultiple Choice

Fixed Investments — Quiz

Question 24 • Financial Math

An index fund tracks a market index and offers returns based on market performance. Is this a fixed investment?

Answer
A
No, because it does not guarantee principal repayment.
B
Yes, because it tracks a market index.
C
Yes, because it offers diversified returns.
D
No, because the returns are variable and depend on market performance.

Explanation

A fixed investment has returns that are predetermined or guaranteed. An index fund’s returns change with the performance of the market index it tracks, so they are variable. Therefore, it is not a fixed investment; choice C is correct.

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