If an Investor Believes That Financial Markets Are Inefficient, That

question 7

True/False

If an investor believes that financial markets are inefficient, that argues for the individual to pursue a more active portfolio strategy.

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Definitions:

Diversified Portfolio

An investment portfolio that includes a variety of asset types in order to reduce risk.

ETFs

Exchange-Traded Funds, which are investment funds traded on stock exchanges, similar to stocks, and hold assets such as stocks, commodities, or bonds.

Capital Gain Distributions

Payments to shareholders or fund investors from the sale of securities within the portfolio that have appreciated in value.

Income Distributions

Payments made from a fund or an entity to its shareholders, often derived from interest or dividend income.