assuming that the stock market is efficient which of the following statements is correct? A. investors can make money through investing in hot IPO‘s. B. skilled mutual fund managers can outperform the market by selecting undervalued stocks. C. investing in individual stocks is always more rewarding than in diversified portfolios. D. The best investment vehicle is market index funds.
assuming that the stock market is efficient which of the following statements is correct? A. investors can make money through investing in hot IPO‘s. B. skilled mutual fund managers can outperform the market by selecting undervalued stocks. C. investing in individual stocks is always more rewarding than in diversified portfolios. D. The best investment vehicle is market index funds.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter25: Portfolio Theory And Asset Pricing Models
Section: Chapter Questions
Problem 9MC
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assuming that the stock market is efficient which of the following statements is correct?
A. investors can make money through investing in hot IPO‘s.
B. skilled mutual fund managers can outperform the market by selecting undervalued stocks.
C. investing in individual stocks is always more rewarding than in diversified portfolios.
D. The best investment vehicle is market index funds.
Expert Solution
Step 1
Efficient market hypothesis is based on the concept that the share prices of company reflect all available information in the market i.e., shares of a company trade at their fair market values and no investor or trader or analyst can out perform the market.
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