Historical Returns Support Which One of the Following Statements

question 28

Multiple Choice

Historical returns support which one of the following statements?

• A) Financial markets are highly inefficient as suggested by behavioral finance.
• B) Professional money managers tend to outperform the Vanguard 500 index fund about 60 percent of the time on average.
• C) The longer the time span, the more likely a professional money manager will outperform an index fund, such as the S&P 500.
• D) Historical data supports the statement that arbitrage results in a 100 percent totally efficient market.
• E) The financial markets appear to be highly efficient because, on average, they outperform professional money managers.

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Definitions:

Stockholders' Equity

The amount of capital given to a company by its shareholders, plus retained earnings or minus the company's accumulated losses.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, showing assets, liabilities, and equity at a specific point in time.

Common Stock

Common stock represents ownership shares in a corporation, providing voting rights and potential dividends to shareholders.

Earnings Per Share

A financial ratio that measures the amount of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.