Which of the Following Would Be the Best Strategy for a Long-Term

question 268

Multiple Choice

Which of the following would be the best strategy for a long-term investor wanting to earn an attractive rate of return?

• A) Pick stocks that have done well in the past.
• B) Buy shares of an equity mutual fund indexed to the S&P 500.
• C) Purchase shares of a money market mutual fund.
• D) Buy shares of an actively managed equity mutual fund.

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Definitions:

Irrelevant Information

Data or facts that do not influence decision-making processes in a given context, lacking value for the question or decision at hand.

Prospect Theory

A psychological theory that describes how people choose between probabilistic alternatives that involve risk.

Package Shrink

The reduction in the size or quantity of a product in its packaging while maintaining or increasing its price.

Organ Donation

The act of giving an organ or a part of an organ for transplantation into another person.