What is a key consideration for investors looking to mitigate the cyclical nature of factor performance? Option: Focusing on factors with consistent historical outperformance, Selecting funds with the lowest expense ratios, Timing the market based on economic indicators, Investing in a diverse range of factors

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What is a key consideration for investors looking to mitigate the cyclical nature of factor performance?

Focusing on factors with consistent historical outperformance

Selecting funds with the lowest expense ratios

Timing the market based on economic indicators

Investing in a diverse range of factors

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Which of the following is a potential benefit of building a portfolio using different factors?

"Maximizing short-term profits"

"Guaranteeing a fixed rate of return"

"Ensuring all investments are in large-cap companies"

"Reducing the overall volatility of the portfolio"

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What strategy can help investors build a robust investment portfolio?

"Investing in a single high-performing mutual fund"

"Timing the market to buy low and sell high"

"Relying solely on past performance of mutual funds"

"Diversifying investments across different industries and asset classes"

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What is a recommended strategy for mitigating financial risk in mutual fund investments?

Relying solely on past performance of a fund

Timing the market to buy low and sell high

Investing in a balanced way across multiple asset classes

Investing all funds in a single high-return sector

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What is the primary focus of Factor Investing?

"Selecting investments based on specific characteristics that drive returns"

"Analyzing macroeconomic trends to predict market movements"

"Investing in companies with strong momentum"

"Identifying stocks with high dividend yields"

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What is the fundamental rationale behind diversifying one's investment holdings?

To maximize the potential for achieving exceptional investment returns

To mitigate the potential impact of market fluctuations on overall portfolio value

To expand the number of assets held within the investment portfolio

To simplify the investment approach by focusing on a limited range of assets