Proponents of the EMH typically advocate
A)buying individual stocks on margin and trading frequently.
B)investing in hedge funds.
C)a passive investment strategy.
D)buying individual stocks on margin, trading frequently, and investing in hedge funds.

Question

Quizplus · Accepted Answer

Proponents of the Efficient Market Hypothesis (EMH) believe that it is impossible to consistently beat the market by using any kind of analysis, research or insider information. Thus, they advocate a passive investment strategy which involves investing in a diversified portfolio, such as an index fund, and holding it for a long time. This is because they believe that the market is efficient and all available information is already reflected in the current stock prices, making it difficult to predict future movements. Therefore, choice C is the best choice as it aligns with the EMH.

Proponents of the EMH Typically Advocate