Multiple choice

The expense ratio used for measuring fund performance is an indicator of

  1. product market condition

  2. growth in the economy

  3. prevalent market practices

  4. the fund's efficiency

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The expense ratio measures a fund's operating efficiency by showing total annual expenses as a percentage of average assets. A lower expense ratio indicates more efficient fund operations, as less investor money is consumed by management fees and administrative costs. It does not measure market conditions or economic growth.