What Is the Objective of a Passive Fund Manager

question 44

Multiple Choice

What is the objective of a passive fund manager?

• A)To earn returns similar to the market index by adopting a 'buy and hold' strategy
• B)To earn return similar to the 10- year bond rate by buying and selling treasury notes in an effort to realise capital gains
• C)To outperform the index by buying and selling shares in an effort to realise capital gains
• D)None of the above

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Definitions:

Futures Contract

A contractual agreement regulated by law, specifying the sale or purchase of an item at a fixed price, to be executed at a later date.

Spot Price

The immediate market value at which certain assets, like commodities, currencies, or securities, are available for purchase or sale with instant delivery.

Liquidate

The process of converting assets into cash or equivalent by selling them, often used in the context of closing a business or paying off debts.

Profits

The financial gain obtained when the amount earned from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.