Which of the Following Is a Disadvantage of Market Timing

question 55

Multiple Choice

Which of the following is a disadvantage of market timing?

• A) It requires investors to make frequent trades.
• B) It has steady but very low returns because the investments are low-risk.
• C) It lets investors take away bigger earnings than brokers.
• D) It is time-consuming as the stockholders have to wait for the market situation to be profitable.

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Definitions:

Risk-neutral

An attitude towards risk where an individual values all outcomes equally without preference for risk.

Risk-loving

A preference or inclination to undertake investment with uncertain outcomes, often with the potential for significant gains.

Utility

A measure of satisfaction, usefulness, or value that a consumer derives from consuming a good or service.

Decreasing Rate

A situation or condition in which the rate at which something occurs or is processed diminishes over time.