Given That Markets Are Efficient,what Is the Most Logical Explanation

question 122

Multiple Choice

Given that markets are efficient,what is the most logical explanation of the fact that a portfolio manager can outperform the S&P 500 by 5% annually?

• A) The manager is an expert stock selector.
• B) The manager has relied on insider information.
• C) Stocks do not follow a random-walk pattern.
• D) The manager's results have not been adjusted for the riskiness of the portfolio.

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Definitions:

Solitary Tract

A bundle of nerve fibers in the brainstem involved in transmitting sensory information, particularly from the internal organs.

Cranial Nerves

The 12 nerve pairs that control sensory and motor functions of the head, neck, and internal organs.

Sensory Experience

The interpretation of sensory information (touch, taste, smell, sight, and sound) to form a unique personal experience or perception.

Cognitive Interpretations

The mental processes involved in perceiving, recognizing, and understanding thoughts, behaviors, and events, often influencing how individuals react to their environment.