Strategy Intermediate:
Market Timing
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Choose wisely. There is only one correct answer to each question.
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1.
A whipsaw occurs when a successful timing strategy is executed and the investor makes gains on his or her trades.
Choose wisely. There is only one correct answer.
True
False
False. A whipsaw indicates investors are reversing themselves and may be losing money on the transactions.
2.
Most portfolio managers do not use market timing.
Choose wisely. There is only one correct answer.
True
False
False. Most portfolio managers do use market timing.
3.
Which type of allocation changes assets in response to short-term market changes?
Choose wisely. There is only one correct answer.
Dynamic asset allocation
Tactical asset allocation
Neither
Tactical asset allocation. Tactical asset allocation changes assets in response to short-term market changes.
4.
Which of the following is not true about market timing?
Choose wisely. There is only one correct answer.
It attempts to reduce price risk.
Its main goal is to reduce taxes.
It uses technical analysis.
Its main goal is to reduce taxes. Reducing taxes is not a major goal of market timing.
5.
Market timing strategies always outperform the market.
Choose wisely. There is only one correct answer.
True
False
False. Even the best market timing strategies sometimes underperform the market.
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