Quiz · How Index Funds Reduce Risk

Question 1What is the main purpose of this listening passage?

To warn people never to buy company shares To explain how daily news affects markets To explain why index funds are safer for beginners To describe how active traders make profits

Question 2How does an index fund protect investors when one company does badly?

Other companies in the fund can balance out the loss The fund sells all its shares in that company The fund stops adding new money for a year Investors get their money back from the company

Question 3According to the passage, what is the hardest part of investing in index funds?

Choosing which companies to buy each month Finding enough money to start investing Following the daily news about the market Staying calm when prices fall sharply