A market timer would be expected to have a portfolio with
A) a beta of 1.4 if an up market is anticipated.
B) a beta of 1.2 if a down market is anticipated.
C) a beta of .8 if an up market is anticipated.
D) little turnover.

Question

Quizplus · Accepted Answer

Market timers adjust their portfolios based on their expectations of future market movements. If an up market is anticipated, a market timer would likely choose investments with a beta higher than 1 (such as 1.4) to maximize returns, as these investments would be expected to outperform the market. Choices B, C, and D do not align with typical market timing strategies, especially expecting a down market and still choosing a portfolio with a beta higher than 1, choosing a lower beta for an up market, or having little turnover, which contradicts the active nature of market timing.

A Market Timer Would Be Expected to Have a Portfolio