Studies of the Performance of Professionally Managed Mutual Funds fiNd

question 11

Multiple Choice

Studies of the performance of professionally managed mutual funds find that these funds:

• A)do not outperform a market index.Assuming mutual fund managers rely primarily on
• Public information, this finding refutes the semistrong form of the efficient market
• Hypothesis.
• B)do not outperform a market index.Assuming mutual fund managers rely primarily on
• Public information, this finding supports the semistrong form of the efficient market
• Hypothesis.
• C)outperform a market index.Assuming mutual fund managers rely primarily on public
• Information, this finding refutes the strong form of the efficient market hypothesis.
• D)outperform a market index.Assuming mutual fund managers rely primarily on public
• Information, this finding supports the semistrong form of the efficient market hypothesis.
• E)Both C and D.

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Definitions:

Put Option

A contractual financial arrangement allowing the option holder to sell a designated quantity of an underlying asset at a fixed price before a certain deadline, without any compulsory action.

Strike Price

The fixed price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Market Price

The existing rate at which a good or service is available for buying or selling.

Call Option

A financial contract granting the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a certain period.