Which Statement Is TRUE Regarding Active Investing

question 226

Multiple Choice

Which statement is TRUE regarding active investing?

• A) Active investing typically has higher average returns than passive investing.
• B) Active investing and passive investing typically have equal returns on average.
• C) Active investments typically have higher fees and lower returns on average than passive investments.
• D) Active investing has been shown to be the only type of investing that can consistently "beat the market."

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Definitions:

Operating Income

Earnings from a company's core business operations, excluding non-operating income and expenses, taxes, and interest.

Net Cash Inflows

The total amount of cash that a company receives during a given period, minus the total amount of cash outflows.

Payback Period

The length of time required to recover the cost of an investment, calculated by dividing the initial investment by the annual cash inflow.

Net Present Value

A calculation used to determine the value of a series of future cash flows discounted back to the present day, often employed in capital budgeting to assess the profitability of an investment.