In an efficient capital market,the appropriate investment strategy for most investors is the ________.
A)daily tradinghigh volume approach
B)inactive portfolio approach
C)active portfolio approach
D)buy low and sell high approach

Question

Quizplus · Accepted Answer

In an efficient capital market, most investors should follow an inactive portfolio approach. This approach involves investing in a diverse portfolio of assets and holding them for the long term without actively buying or selling them based on market fluctuations. This is because in an efficient market, prices reflect all available information, making it difficult for investors to consistently outperform the market through active trading. Therefore, an inactive approach allows investors to benefit from long-term market growth and minimize transaction costs.

In an Efficient Capital Market,the Appropriate Investment Strategy for Most