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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.
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.
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False. Most portfolio managers do use market timing.
3.
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.
4.
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.
5.
Market timing strategies always outperform the market.
Choose wisely. There is only one correct answer.
False. Even the best market timing strategies sometimes underperform the market.