If Mutual Funds Make Investments in Efficient Financial Markets, They

question 33

Multiple Choice

If mutual funds make investments in efficient financial markets, they

• A)cannot outperform the market consistently
• B)should not outperform the market consistently
• C)will underperform the market when securities prices decline
• D)primarily bear unsystematic risk

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Definitions:

Neo-Evolutionary Theory

A theoretical perspective that attempts to explain the process of social evolution in societies through mechanisms such as adaptation, selection, and variation, building upon earlier evolutionary theories.

Theory of Competition

An economic theory that describes how individuals and firms compete within a market to maximize their benefits, usually through price, quality, and innovation.

Cyclical Theory

A theory suggesting that events or phenomena occur in predictable cycles, often applied to economics and history.

Conflict Theory

A sociological perspective that views social life as a competition for scarce resources, emphasizing the role of power and inequality in causing social conflict and change.