What is the primary goal of an index fund?

"To outperform the market" "To provide returns that match the market's performance" "To invest in high-growth startups" "To generate short-term profits through frequent trading"

Which of the following is a key advantage of index funds compared to actively managed funds?

"Higher expense ratios" "Frequent asset allocation changes" "Lower tax liabilities" "Greater potential for short-term gains"

What factor should an investor primarily consider when determining if index funds align with their financial goals?

"Their understanding of complex financial jargon" "Their ability to predict short-term market fluctuations" "Their investment timeline and risk tolerance" "Their knowledge of specific companies' performance"

Why might an investor with a short-term financial goal choose an equity fund over an index fund?

"Equity funds guarantee higher returns" "Index funds are only suitable for retirement planning" "Equity funds typically have shorter investment horizons" "Index funds involve excessive risk for short-term goals"

What makes index funds a suitable investment option for individuals seeking long-term growth with modest returns?

"They provide opportunities for day trading" "They require active management and frequent trading" "They offer a simple and cost-efficient way to diversify a portfolio" "They guarantee protection against market fluctuations"