Which of the Following Is an Implication of Efficient Markets

question 27

Multiple Choice

Which of the following is an implication of efficient markets?

• A)An investor should employ a buy-and-hold strategy when investing to minimize transaction costs.
• B)The only way an investor can expect to increase his expected return is to increase the risk of his portfolio.
• C)Only institutional investors or very wealthy individuals can expect to earn excess returns.
• D)Both A and B are true statements.

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Definitions:

Activity Cost Pools

A method in cost accounting used to group all related costs associated with specific activities.

Activity-Based Costing

A pricing method that allocates expenses to goods or services according to the resources they use.

Machine-Hours

A measure of production time, indicating the total hours that machines are operational within a set period.

Overhead Cost

Expenses related to the day-to-day operations of a business that aren't directly tied to the production of goods or services.