Investors following a passive strategy use which of the following as the best estimate of a security's value?
A)the dividend discount model.
B)Fisher model.
C)current market price.
D)current earnings per share.

Question

Quizplus · Accepted Answer

Investors following a passive strategy do not actively try to analyze a security's value or forecast its future performance. Instead, they believe in the efficient market hypothesis, which states that the current market price of a security reflects all available information and is the best estimate of its true value. Therefore, they rely on the current market price as their best estimate of a security's value. Choices A, B, and D require some level of analysis or forecasting, which is not part of a passive strategy.

Investors Following a Passive Strategy Use Which of the Following