If the Financial Markets Are Highly Efficient, Then

question 3

Multiple Choice

If the financial markets are highly efficient, then:

• A)investing based on technical analysis is highly recommended.
• B)holding a diversified, low-cost, passively managed portfolio is probably your best investment strategy.
• C)you should adopt an investment strategy based on market timing.
• D)having a professional manager who actively trades your portfolio is most likely your best investment strategy.
• E)it does not matter which securities you invest in as all securities will provide relatively equal returns.

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Definitions:

Demand Decreased

A situation where the desire or need for a particular product or service declines.

Demand Increased

A situation where the desire to purchase goods and services at a given price level rises, leading to higher quantity demanded.

Wage Rate

The standardized amount of pay that a worker receives for performing a certain job or task, typically expressed per hour or unit of work.

Retail Market

The part of the economy that deals with the sale of goods or services directly to consumers, encompassing a wide range of businesses and stores.