The Efficient Markets Hypothesis Indicates That Investors

question 41

Multiple Choice

The efficient markets hypothesis indicates that investors

• A)can use the advice of technical analysts to outperform the market.
• B)do better on average if they adopt a "buy and hold" strategy.
• C)let too many unexploited profit opportunities go by if they adopt a "buy and hold" strategy.
• D)do better if they purchase loaded mutual funds.

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Definitions:

Variables

Elements, features, or factors that are likely to vary or change within a study, model, or experiment.

Expectancy Theory

A psychological theory proposing that people are motivated to act in a certain way based on their expectation of the outcome and its attractiveness.

Reinforcement Theory

A theory in psychology that describes behavior as being driven by external rewards or punishments.

Need Hierarchy

A theory suggesting that people are motivated to fulfill basic needs before moving on to other, more advanced needs.