One important implication of the efficient markets hypothesis is that most investors
A)should avoid active trading.
B)can benefit by purchasing high-beta stocks.
C)should trade actively to help ensure the highest overall gain in their portfolios.
D)should hold IPO stock issues for the long term.

Question

Quizplus · Accepted Answer

The efficient markets hypothesis suggests that it is not possible to consistently outperform the market through active trading, as all available information is already reflected in the stock prices. Therefore, most investors should avoid active trading and instead focus on passive investing strategies such as indexing.

One Important Implication of the Efficient Markets Hypothesis Is That