Which one of the following statements concerning formula plans is correct?
A) The use of subjective judgment is important to the routine administration of most formula plans.
B) Formula plans are based on the adherence to a mechanical set of rules with regard to when to buy and/or sell.
C) The objective of most formula plans is to maximize profits.
D) Securities with very stable prices are best suited to nearly all formula plans.

Question

Quizplus · Accepted Answer

Formula plans involve following a specific, predetermined set of rules for buying and selling securities, rather than relying on subjective judgment or attempting to time the market for maximum profit. These plans aim to reduce the emotional aspect of investing and provide a disciplined approach to buying and selling.

Which One of the Following Statements Concerning Formula Plans Is