According to the Efficient Markets Hypothesis, Who Should Earn the Highest

question 20

Multiple Choice

According to the efficient markets hypothesis, who should earn the highest risk-adjusted return on stocks?

• A)a financial expert who can devote considerable time to research
• B)the average investor who doesn't do too much research
• C)someone throwing darts at possible stock picks
• D)all of the above should earn the same average return

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Definitions:

Competition

The economic rivalry between companies or individuals for a larger share of a market, leading to better quality products and services at lower prices.

Competition

The rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix.

Independently Acting Buyers

are consumers who make purchasing decisions based on their own preferences and circumstances, without coordinating with others.

Freedom to Enter

The condition in a market where new firms can enter the industry without facing prohibitive barriers or regulations.