If the Efficient Markets Hypothesis Is Valid, Then a Person

question 262

Multiple Choice

If the efficient markets hypothesis is valid, then a person should:
I. buy mutual funds.
II. diversify.
III. follow a buy-and-hold strategy.

• A) I and II only
• B) I and III only
• C) II and III only
• D) I, II, and III

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Definitions:

Existing Structure

The current organization or arrangement of a company's capital, operations, or physical layout.

Initial Outlay

The initial investment amount or initial cost incurred in starting a project, purchasing an asset, or initiating an investment.

Incremental Cash Flows

The additional cash flow generated by a company from undertaking a particular project or investment.

New Venture

Refers to a newly established business entity created with the intention of entering a market.