Index funds, which replicate the movements of a stock exchange rather than trying to beat the market, follow:
A) fundamental analysis.
B) technical analysis.
C) the efficient market hypothesis.
D) present value analysis.

Question

Quizplus · Accepted Answer

Index funds follow the efficient market hypothesis, which states that it is impossible to consistently beat the market because all available information is already reflected in securities prices. Therefore, index funds seek to replicate the movements of a stock exchange rather than trying to outperform it. Fundamental analysis and present value analysis are methods for valuing individual securities, while technical analysis is a method for predicting future price movements based on historical market data.

Index Funds, Which Replicate the Movements of a Stock Exchange