If the Securities Market Is Efficient,an Investor Need Only Throw

question 53

Multiple Choice

If the securities market is efficient,an investor need only throw darts at the stock pages to pick securities and be just as well off.

• A) This is true because there are no differences in risk and return.
• B) This is true because in an efficient stock market prices do not fluctuate.
• C) This is false because professional portfolio managers prefer to generate commissions by active trading.
• D) This is false because investors may not hold a desirable risk-return combination in their portfolio.
• E) This is false because the markets are controlled by the institutional investors.

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