Strategy Intermediate: Market Timing

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1.
A stock that has its performance tied to economic trends is called a(n) _______.
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Cyclical stock. A cyclical stock moves up and down with trends in the overall economy.
2.
Which of the following is not true about market timing?
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Its main goal is to reduce taxes. Reducing taxes is not a major goal of market timing.
3.
A whipsaw occurs when a successful timing strategy is executed and the investor makes gains on his or her trades.
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False. A whipsaw indicates investors are reversing themselves and may be losing money on the transactions.
4.
Which of the following is a risk of the buy and hold strategy?
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High volatility. This could lead to heavy losses.
5.
A mutual funds volatility may be reduced by market timing.
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True. When used skillfully, market timing can reduce a mutual funds volatility.