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8. Which of the following is considered a disadvantage of the passive approach to investing? a....

8. Which of the following is considered a disadvantage of the passive approach to investing? a. High fees b. Inability to beat the market c. Flexibility d. High trading costs

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Answer #1

option (B) i.e Inability to beat the market is the correct answer.

Passive investing refers to a buy-and-hold strategy for long-term investment horizons, with minimum trading.Index investing is the most common form of passive investing, where investors seek to replicate and hold a broad market index or indices.

Passive investment is cheap, less complex, and produces superior after-tax results over medium to long time horizons than actively managed portfolios.

Passive managers believe it is difficult to out-think the market, so they try to match market or sector performance. Passive investing attempts to replicate market performance.

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