In an efficient capital market,the appropriate investment strategy for most investors is the ________.
A) daily trading and 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, where all publicly available information is reflected in stock prices, it is difficult for investors to consistently outperform the market. Therefore, the most appropriate investment strategy for most investors is the inactive portfolio approach, which involves buying and holding a diversified portfolio of stocks for the long-term. This approach minimizes transaction costs and the possibility of making costly mistakes from attempting to time the market or pick individual stocks.

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