Which of the following activities would be most useful in an efficient market?
A) buying and holding a diversified portfolio
B) searching for patterns in charts based on stock price movements
C) analyzing financial ratios based on accounting data
D) buying only securities that have performed well in the recent past

Question

Quizplus · Accepted Answer

In an efficient market, all available information is already reflected in stock prices, making it difficult to consistently outperform the market through active trading strategies such as searching for patterns in stock prices, analyzing financial ratios, or selecting securities based on past performance. Therefore, buying and holding a diversified portfolio is considered the most useful strategy, as it minimizes risk while capturing the market's overall returns.

Which of the Following Activities Would Be Most Useful in an Efficient