Which of the following statements about capital markets is TRUE?
A) Returns of high-beta stocks tend to vary less than overall market prices.
B) The efficient market hypothesis states that it is not possible to consistently 'beat the market' by using publicly available information.
C) If the efficient market hypothesis were true, it would be impossible to make money in the stock market.
D) None of the above is true.

Question

Quizplus · Accepted Answer

The efficient market hypothesis is a concept in which all available information is already reflected in the stock prices, making it impossible for investors to consistently 'beat the market' by using publicly available information. Therefore, choice B is the true statement. Choice A is incorrect because high-beta stocks tend to have more volatility than the overall market, thus their returns will vary more. Choice C is incorrect because it assumes that the efficient market hypothesis is true, which is not necessarily the case in real life.

Which of the Following Statements About Capital Markets Is TRUE