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:

Expert Power

Influence wielded by an individual due to their expertise, skills, or knowledge, which others perceive as valuable.

Referent Power

A form of influence based on the attractiveness and charisma of the leader or influencing agent.

Expert Power

The influence one possesses as a result of expertise, skills, or knowledge, which others perceive as valuable or essential.

Referent Power

A form of influence based on the leader's personal traits, where followers identify with and wish to emulate the leader.