the economics of money, banking, and financial markets

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17. 
    

    The advantage of a "buy-and-hold strategy" is that ____.
    A) net profits will tend to be higher because there will be fewer brokerage commissions
    B) losses will eventually be eliminated
    C) the longer a stock is held, the higher will be its price
    D) profits are guaranteed
    Answer: A
    Diff: 2 Type: MC Page Ref: 152
    Skill: Recall
    Objective List: 7.2 Determine how information in the market affects asset prices

    
    


18. 
    

    For small investors, the best way to pursue a "buy and hold" strategy is to ____.
    A) buy and sell individual stocks frequently
    B) buy no-load mutual funds with high management fees
    C) buy no-load mutual funds with low management fees
    D) buy load mutual funds
    Answer: C
    Diff: 2 Type: MC Page Ref: 152
    Skill: Recall
    Objective List: 7.2 Determine how information in the market affects asset prices

    
    


19. 
    

    A situation when an asset price differs from its fundamental value is ____.
    A) a random walk
    B) an inflation
    C) a deflation
    D) a bubble
    Answer: D
    Diff: 1 Type: MC Page Ref: 153
    Skill: Recall
    Objective List: 7.2 Determine how information in the market affects asset prices

    
    


20. 
    

    In a rational bubble, investors can have ____ expectations that a bubble is occurring but
    continue to hold the asset anyway.
    A) irrational
    B) adaptive
    C) rational
    D) myopic
    Answer: C
    Diff: 1 Type: MC Page Ref: 153
    Skill: Recall
    Objective List: 7.2 Determine how information in the market affects asset prices