Which of the following is an appropriate investment objective for a mutual fund with a buy-and-hold approach?

• A. Market timing to maximize returns
• B. Short-term speculation
• C. Frequent trading for quick profits
• D. Long-term capital appreciation

Answer: (D)

Verified step by step guidance

1. Understand the concept of a mutual fund with a buy-and-hold approach. This strategy involves purchasing investments and holding them for a long period, focusing on stability and growth over time rather than frequent trading.
2. Analyze the given options. Market timing, short-term speculation, and frequent trading are strategies that involve active management and quick decision-making, which are contrary to the buy-and-hold approach.
3. Recognize that the buy-and-hold strategy aligns with long-term investment goals, such as capital appreciation, which refers to the increase in the value of an investment over time.
4. Eliminate options that involve short-term or active trading strategies, as they do not align with the buy-and-hold philosophy.
5. Conclude that the appropriate investment objective for a mutual fund with a buy-and-hold approach is long-term capital appreciation, as it matches the strategy's focus on steady growth over time.