The Fact That the Majority of Stock Mutual Funds Cannot

question 135

Multiple Choice

The fact that the majority of stock mutual funds cannot outperform the stock market averages is consistent with:

• A) the no free lunch principle.
• B) the risk-return trade-off principle.
• C) the efficient markets hypothesis.
• D) the active trading hypothesis.

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Definitions:

Agency

A relationship between two parties in which one party (the agent) agrees to represent or act for the other (the principal).

Improbable

Unlikely to occur or be true.

Estopped

Estopped refers to a legal principle that prevents a person from arguing something contrary to a claim they previously made or agreed to by their actions or words.

Requisite Authority

The necessary or required power, permission, or jurisdiction to perform an action or enforce a policy.