Compare ETFs and mutual funds without the jargon: test your skills
“Index fund” describes the strategy; “mutual fund” and “ETF” describe how the fund is packaged and traded. Answer each question to see the explanation; your score appears at the end.
This test checks that you can
- Separate strategy (index) from wrapper (mutual fund or ETF)
- Compare how each trades
- Know the cost and tax differences
- Practice
1. “Index fund” describes…
- Practice
2. Mutual funds trade…
- Practice
3. Often more tax-efficient in taxable accounts…
- Key idea
4. Which statement best explains "Strategy versus wrapper"?
- Key idea
5. Which statement best explains "Once a day versus all day"?
- Key idea
6. Which statement best explains "Cost matters most"?
- Action plan
7. In the action plan, which step comes first?
- Mistake to avoid
8. Which of these is a mistake this lesson warns against?
- Mistake to avoid
9. Which of these is a mistake this lesson warns against?
Active fund costs 0.85%, index fund 0.05%. On $25,000, what is the yearly cost difference?
Show the answer
$200
0.85% − 0.05% = 0.80%. $25,000 × 0.008 = $200.
In your retirement plan, find whether each fund is index or active and note its expense ratio.
More tests in this bootcamp
- See how compound interest builds over time
- Understand index funds, diversification and fees
- What is an ETF? Understand the basket behind a share
- Compare ETFs and mutual funds without the jargon
- Understand the S&P 500 and what it leaves out
- Explore total market funds and check the overlap
- Understand international diversification and currency risk
- Look beyond the story of a sector or thematic fund
- Understand a three-fund portfolio and rebalancing
- Learn dollar-cost averaging: a schedule instead of market timing
- Final exam: Funds and portfolios