CFA Practice Question

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CFA Practice Question

A mean-reverting investment strategy involves:

A. Riding the trend and holding onto winning positions.
B. Buying assets with recent poor performance expecting a return to their historical average.
C. Ignoring historical price movements.

Correct Answer: B

Mean reversion trading is a strategy that buys when an asset price is low, and then sell it on the next "bounce" higher.

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