A Purely Passive Strategy

question 21

Multiple Choice

A purely passive strategy

• A) uses only index funds.
• B) uses weights that change in response to market conditions.
• C) uses only risk-free assets.
• D) is best if there is "noise" in realized returns.
• E) is useless if abnormal returns are available.

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Definitions:

Filtrate

Filtrate refers to the fluid that has passed through a filter, which can include the removal of solids from liquids or gases.

Ammonia

A colorless gas with a pungent smell, composed of nitrogen and hydrogen (NH3), commonly used in fertilizers.

Nitrogen

A colorless, odorless, tasteless, nonmetallic element that constitutes 78 percent of the Earth's atmosphere; vital for all living organisms as a component of proteins and nucleic acids.

Protein Breakdown

The cellular process of breaking down proteins into their amino acid components, often for recycling or energy production.