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Investment Fund Management Style

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Questions and Answers

What is the objective of a funds management style?

To replicate the performance of a particular market index (correct)

To outperform a particular market index

To invest only in a specific sector

To minimize losses in a declining market

What is the goal of replicating a market index?

To match the market average (correct)

To invest in high-growth companies

To beat the market average

To diversify a portfolio

Which of the following is a characteristic of a replication strategy?

Regular portfolio rebalancing

Active stock picking

Investing in a particular sector

Replicating a market index (correct)

What is the main benefit of a replication strategy?

<p>Lower trading costs (C)</p> Signup and view all the answers

Which of the following is NOT a characteristic of a replication strategy?

<p>Active stock picking (B)</p> Signup and view all the answers

Study Notes

Funds Management Style

The objective of a funds management style is to achieve a specific investment outcome or return.

Replication Strategy

The goal of replicating a market index is to track the performance of the index.
A characteristic of a replication strategy is that it involves holding all the securities in the target index.
The main benefit of a replication strategy is that it provides broad diversification and can be a cost-effective way to gain exposure to a particular market or asset class.
NOT a characteristic of a replication strategy is that it involves selecting only a subset of securities in the target index.

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Description

This quiz assesses knowledge of investment fund management styles, specifically those that aim to replicate the performance of a particular market index. It covers the objectives, goals, and characteristics of replication strategies.