A prominent young business economist has recently developed
a computer model for portfolio selection that was able to select
portfolios yielding rates of return much higher than the market
average during a recent 5 year bull (rising) market. His model
1. is a bad guide to stock market investing
because it does not take judgmental factors into account.
2. might well be good at identifying
high-risk stocks.
3. will probably also select stocks that
out-perform the market average in bear (declining) markets.
4. is a good guide to stock market investing
because it selects stocks that out-perform the market average.
Choose the correct option.