The Efficient Markets Hypothesis Implies That an Investor

question 12

Multiple Choice

The efficient markets hypothesis implies that an investor:

• A) cannot systematically outperform the market as a whole over time.
• B) should rely on publicly available information to outperform the market.
• C) should buy and sell lower volumes of shares.
• D) can manage a portfolio and regularly outperform the whole market.

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Definitions:

U.S. Economy

The economic system of the United States, characterized by a mixed economy that supports free market activities while also having government intervention in certain sectors.

Goods And Services

The products (goods) and activities (services) offered in the market for purchase, representing the output of an economy’s production.

Operating Costs

Operating costs are expenses associated with the day-to-day functions of a business, including costs for goods, services, rent, and salaries.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business.