Strategy Intermediate: Market Timing

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1.
Which type of allocation changes assets in response to short-term market changes?
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Tactical asset allocation. Tactical asset allocation changes assets in response to short-term market changes.
2.
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.
3.
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.
4.
Most portfolio managers do not use market timing.
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False. Most portfolio managers do use market timing.
5.
When you sell short, you hope share prices will _______.
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Fall. You sell short to make money on the falling price of a security.