SIE Understanding Products and Their Risks Practice Question 21

Correct Answer: A

Explanation:

A: Absolute return refers to the goal of having favorable returns in good markets and bad, usually by hedging, or generating favorable returns by matching an investment with another investment that will do well when the original investment does not. Index mutual funds may pursue the return of an index, such as the S&P 500 Index, by investing in substantially the same stocks although not with the specifics of Choice B or Choice C. Choice D may be a hope for a fund but is not typically stated as a specified goal.