In an efficient capital market,the appropriate investment strategy is risk control,________ and ________.
A) low diversification; high turnover of securities
B) low diversification; low turnover of securities
C) high diversification; high turnover of securities
D) high diversification; low turnover of securities

Question

Quizplus · Accepted Answer

In an efficient capital market, the appropriate investment strategy is to maximize diversification and minimize turnover of securities. This is because an efficient market reflects all available information, making it difficult to gain an edge through frequent trading. On the other hand, diversification allows investors to spread out their risk and reduce the impact of any single security on their portfolio. Therefore, the best choice is D, which combines high diversification with low turnover of securities.

In an Efficient Capital Market,the Appropriate Investment Strategy Is Risk