Qualified Financial Adviser (QFA) Investments Exam 1 Practice Test

If a fund aims to outperform a stock market index, which investment management style is it adopting?

Open-ended. Passive. Active. Closed.

Correct Answer:

Active.

Explanation:

A fund that aims to outperform a stock market index is using active management. In active management, the manager makes intentional security selections and sometimes timing decisions with the goal of delivering returns above the chosen benchmark. Passive management, by contrast, seeks to mirror the index's returns rather than beat them. Open-ended and closed-end describe fund structures (how investors buy/sell and how shares are issued or traded) and can house either active or passive strategies, so they don’t define the management style.

Access more questions from this quiz

Continue to Qualified Financial Adviser (QFA) Investments Exam 1 Practice Test for more practice questions and the full quiz experience.

Access More Questions