What Is the Objective of the Market Timing Strategy

question 150

Multiple Choice

What is the objective of the market timing strategy?

• A) to predict changes in stock prices in order to earn a quick profit by buying low and selling high
• B) to hold a diversified portfolio of stocks for a long period of time in order to take advantage of the long-run upward trend in the stock market
• C) to minimize risk by getting completely out of the stock market when stock prices fall and investing heavily once prices begin to rise
• D) to quickly identify new companies with long-term growth potential and buy their stock before other investors notice them

---

Definitions:

Commercial Banks

Organizations that take in deposits, issue different types of loans, and offer a range of financial services to both individuals and enterprises.

Savings Account

A bank account where money is kept for savings purposes, offering interest on the deposited funds.

Precautionary Cash Balances

Precautionary cash balances refer to money held by both businesses and individuals to meet unexpected expenses or financial emergencies.

Unexpected Expenditures

Expenses that were not planned or budgeted for, often requiring immediate payment.