The Performance of Index Funds

question 61

Multiple Choice

The performance of index funds

• A)usually falls short of the performance of actively-managed funds.
• B)provides evidence in support of the notion that stock prices do not depend upon supply and demand.
• C)provides evidence in support of the efficient markets hypothesis.
• D)provides evidence in support of the notion that stock-market participants are irrational.

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Definitions:

Classical Economic

refers to a school of thought in economics that emphasizes the importance of free markets, competition, and the self-regulating nature of economic systems, originating mainly from the ideas of Adam Smith.

Concentric

Having a common center, as in circles or spheres that are inside one another.

Corporate Social Responsibility

A business model that helps a company be socially accountable to itself, its stakeholders, and the public.

Government Intervention

The involvement of government in the market with the aim to regulate, stabilize, or stimulate economic activity.