Which of the Following Are Correct Arguments Supporting Passive Investment

question 24

Multiple Choice

Which of the following are correct arguments supporting passive investment strategies?
I.Active trading strategies may not guarantee higher returns but guarantee higher costs
II.Passive investors can free ride on the activity of knowledge investors whose trades force prices to reflect currently available information
III.Passive investors are guaranteed to earn higher rates of return than active investors over sufficiently long time horizons

• A) I only
• B) I and II only
• C) II and III only
• D) I, II and III

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Definitions:

Fugue

A fugue is a psychiatric disorder characterized by reversible amnesia for personal identity, including the memories, personality, and other identifying characteristics of individuality.

Repression

The psychological attempt by an individual to block off and push into the unconscious components of the psyche that are considered threatening or unacceptable.

Regressive

Characterized by a return to a former or less developed state, often in behavior or developmental stages.

DSM-5

The fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, a publication for the classification of mental disorders by the American Psychiatric Association.