Multiple choice

Deciding on strategies such as cost averaging, value averaging, active switching, all depend on the

  1. Stock market situation on date

  2. Amount of money to be invested

  3. Investor's risk tolerance

  4. Phase through which the economy is passing
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Investment strategies like cost averaging (investing fixed amounts regularly), value averaging (maintaining a target portfolio value through varying investments), and active switching (moving between funds based on market conditions) are all behavioral tools that must align with the investor's psychological risk tolerance. Market conditions (Options A and D) may influence when to apply these strategies, and investment amount (Option B) affects feasibility, but the fundamental decision of which strategy to adopt depends on risk tolerance. Option C is correct.

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