The Process by Which Investors Seek to Profit by Simultaneously

question 286

Multiple Choice

The process by which investors seek to profit by simultaneously selling an asset with a lower rate of return and buying an otherwise identical asset with a higher rate of return is known as

• A) hedging the market.
• B) passive fund management.
• C) arbitrage.
• D) portfolio balancing.

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Definitions:

Athletic Contests

Competitive physical activities or sports where participants aim to display superior strength, speed, or skill.

Trade and Economic Exchanges

The act of buying, selling, or exchanging goods and services between people or countries, facilitating the distribution of resources, creation of wealth, and economic interdependence.

Self-fulfilling Prophecy

A forecast that, whether directly or indirectly, ensures its own fulfillment through a positive loop between belief and action.

Social Trap

Situations where individuals or groups act against their long-term communal interests by pursuing short-term personal gains.