The attempt to improve performance either by identifying mispriced securities or by timing the performance of broad asset classes is a characteristic of:
A)Active management
B)Passive management
C)Both active and passive management
D)Risk-return trade-off

Question

Quizplus · Accepted Answer

The attempt to improve performance through identifying mispriced securities or timing the performance of broad asset classes indicates a strategy of active management where managers try to outperform the market through stock picking, market timing or other strategies. Passive management, on the other hand, involves tracking a market index with the goal of matching its returns rather than beating it. The risk-return trade-off is a general concept related to investing where higher risk investments yield higher potential returns, but also higher potential losses.

The Attempt to Improve Performance Either by Identifying Mispriced Securities