One important implication of the efficient markets hypothesis is that:
A) investors should hold a diversified portfolio and avoid active trading.
B) investors can benefit by engaging in day trading.
C) investors should trade actively help to ensure the highest overall gain in their portfolios.
D) all of the above.

Question

Quizplus · Accepted Answer

The efficient markets hypothesis suggests that it is difficult to consistently beat the market, as all available information is already reflected in stock prices. Therefore, investors should focus on holding a diversified portfolio and avoiding active trading, as this will help to minimize risk and maximize long-term returns. Day trading and active trading may actually harm an investor's overall performance, as they can lead to unnecessary trading costs and emotional decisions.

One Important Implication of the Efficient Markets Hypothesis Is That