2.Which of the following statements is incorrect about Passive investing?

Group of answer choices

A. Passive investing requires a selection of securities from market and an allocation methodology to decide how much to invest in the securities to be included in the fund (or portfolio).

B. Passive investing incurs no security analyst cost to identify undervalued or overvalued investments.

C.Security allocation methodology in a passive investment include capitalization-based weighting, equal weighting, volume weighting, price weighting etc.

D.Passive investing incurs no transaction cost when the fund (or portfolio) is initially formed.

E.Passive fund (or portfolio) managers can pay index providers (such as MSCI or S&P) to obtain information (through a license) on the securities in the index, and the allocations for each security, on a daily basis.

3. Which of the following statements is incorrect about Value and Growth investing?

A.Value may outperform or underperform growth investing depending on the quality of the fund manager, size of the fund and market conditions.

B. Value and Growth investing result in performance better than benchmark returns.

C. Growth and Value investing have a higher management fee (management cost) compared with capitalization weighted index for the same market segment (such as large capitalized equities).

D. Value investments include firms with depressed prices relative to their (firms') forward earnings, dividends, and sales.

E. Growth investments include firms with healthy short term and long term forward earnings potential.