Question

In an efficient market and for an investor who believes in a passive approach to investing, what is the primary duty of a portfolio manager?A. Accounting for resultsB. DiversificationC. Identifying undervalued stocksD. No need for a portfolio manager

Answer 1

Letter B is correct. Diversification.

Step-by-step explanation:

Diversification in this case is the best option for an investor with this profile. This is because in the passive approach it is considered the price fluctuation information of a stock and the history of its current and future earnings. Therefore, diversification is ideal for this type of investor, because diversifying investments reduces the risk of losses.