- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 5. Time-Series Analysis
- Subject 2. Autoregressive (AR) Time-Series Models
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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