A purely passive strategy is defined as

Question

Quizplus · Accepted Answer

A purely passive strategy is one that does not attempt to outperform the market but rather seeks to match the performance of a particular index, such as the S&P 500. This is typically achieved by investing in index funds, which hold all or a representative sample of the securities in the index. The asset allocation in a purely passive strategy is fixed and does not vary with market conditions. Therefore, choices A and B are both correct. The strategy does not necessarily need to be mean-variance efficient, so choice C is not correct. Therefore, the best choice is D.

A Purely Passive Strategy Is Defined as