Identifying Replication Methods in Passive Equity Investing

Very Easy Passive Equity Investing Replication Methods

In passive equity investing, investors often seek to replicate the performance of a particular market index. One common method employed to achieve this replication is through the use of an index fund. These funds aim to mirror the performance of an index by holding the same securities in the same proportions.

Considering the replication methods used in passive equity investing, which of the following is a primary approach to achieve such replication?

Investing in a fund that actively selects stocks based on fundamental analysis.

Using an index fund that holds the same securities as the market index.

Employing a dynamic trading strategy to frequently buy and sell shares.

Hint

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