203 $
© 2014 Pearson Canada Inc.$
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
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
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
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