If the Financial Markets Are Highly Efficient,then

question 6

Multiple Choice

If the financial markets are highly efficient,then:

• A) investing based on technical analysis is highly recommended.
• B) holding a diversified, low-cost, passively-managed portfolio is probably your best investment strategy.
• C) you should adopt an investment strategy based on market timing.
• D) having a professional manager who actively trades your portfolio is most likely your best investment strategy.
• E) it doesn't matter which securities you invest in as all securities will provide relatively equal returns.

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Definitions:

Groundwater

Moisture trapped below the ground in the soil or within fissures and cavities of rocks.

Cross Section

A diagram or slice that shows the internal structure of a particular object or area, made by cutting or visualizing a cut through the object.

Spring

A natural source of water emerging from the ground, often fed by an underground aquifer.

Perched Lake

A body of water situated above the normal water table, created by local, impermeable layers of rock or sediment.