The Efficient Markets Hypothesis Implies That

question 67

Multiple Choice

The efficient markets hypothesis implies that

• A)building a portfolio based on a published list of the "most respected" companies is likely to produce a better-than-average return.
• B)if a stock rose in price last year,it is likely to rise in price this year.
• C)managed mutual funds should generally outperform indexed mutual funds.
• D)None of the above are correct.

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Definitions:

Financial Incentives

Monetary or fiscal rewards given to employees or teams to motivate performance and achieve desired outcomes.

Pay-for-Performance Plans

Compensation strategies where employees' pay is based on their performance or achievements.

Performance

The execution and completion of tasks and the accomplishment of goals in a given timeframe, often evaluated against a set of standards.

Turnover

The frequency with which staff members exit a firm and are substituted with new hires.