Which Is NOT an Implication of the EMH

question 34

Multiple Choice

Which is NOT an implication of the EMH?

• A) To do superior industry or company analysis, you must understand the variables that affect returns and do a superior job of estimating these variables.
• B) Aggregate market analysis that involves very detailed analysis of reliable historical economic data should outperform a simple buy-and-hold policy.
• C) A superior analyst is one who can consistently select stocks that provide positive abnormal returns on a risk-adjusted basis.
• D) If a portfolio manager does not have any superior analysts, he/she should consider investing funds in an index fund.
• E) If a portfolio manager has some superior analytical skills, they should be encouraged to concentrate in second tier stocks which have liquidity but may be neglected.

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Definitions:

Human DNA

The molecule that carries the genetic instructions used in the growth, development, functioning, and reproduction of all known living organisms and many viruses.

Sick Role

The sick role is a concept in medical sociology that describes the rights and obligations of individuals who are deemed legitimately ill, including the expectation to seek treatment and be exempt from normal duties.

Structural Functionalist

A perspective in sociology that emphasizes the way in which the parts of a society are structured to maintain its stability and functionality.

Pandemic

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