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At the New-Car Dealership, Josh Asks the Salesperson a Number

question 2

Multiple Choice

At the new-car dealership, Josh asks the salesperson a number of questions: "How good is the gas mileage on this model? What does Consumer Reports say about this make and model? Does this car hold its resale value?" The __________ component of Josh's attitude toward the car is most likely to inform his questions.

Definitions:

Vanguard Index 500

A mutual fund that aims to mirror the performance of the S&P 500, managed by Vanguard.

Passive Investment

An investment strategy involving minimal buying and selling, aiming to benefit from long-term market returns with low fees.

Four-factor Model

A financial model that expands the three-factor model (market risk, size risk, and value risk) by adding a momentum factor to explain stock returns.

Fama and French Factors

Fama and French factors are three factors—market risk, size risk, and value risk—used in explaining portfolio returns beyond the market risk measured by beta.