Strong-Form Efficiency Implies That Mutual Fund Managers Should

question 27

Multiple Choice

Strong-form efficiency implies that mutual fund managers should

• A)buy the index that maximizes diversification and minimizes the cost of managing portfolios.
• B)actively seek underperforming stocks and buy them.
• C)generally earn superior returns each year.
• D)attempt to earn superior returns by using technical analysis.

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Definitions:

Nominal Wages

The amount of money paid to workers before adjusting for inflation, reflecting the face value of earnings irrespective of purchasing power.

Annual Rate

A percentage that represents the growth, yield, or return of an investment or account over a one-year period.

Real Wages

The purchasing power of wages, quantifying the amount of goods and services that can be bought, accounting for inflation.

Nominal Wages

Wages paid to workers measured in current money, without adjusting for inflation or purchasing power.