Historical Returns Support Which One of the Following Statements

question 18

Multiple Choice

Historical returns support which one of the following statements?

• A)Financial markets are highly inefficient as suggested by behavioral finance.
• B)Professional money managers tend to outperform the Vanguard 500 index fund about 55 percent of the time on average.
• C)The longer the time span, the more apt a professional money manager is to outperform an index fund, such as the S&P 500.
• D)Historical data supports the statement that arbitrage is unlimited and results in a totally efficient market.
• E)The financial markets appear to be efficient because, on average, they outperform professional money managers.

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Definitions:

Self-Fulfilling Prophecies

Self-fulfilling prophecies are predictions that, once made, influence behaviors and actions in a way that causes the prediction to come true.

Inherited Weaknesses

Genetic or hereditary vulnerabilities passed from parents to their offspring, which may predispose individuals to certain conditions or diseases.

Environmental Conditions

The various physical and biological factors that affect the survival and development of organisms.

Chronological Age

The actual age of a person measured in years from the date of birth.