Which of the following is not a reason why indexing works?
A) Funds incur heavy trading expenses.
B) Securities markets are generally inefficient.
C) Indexing is cost efficient.
D) Indexing has tax advantage.

Question

Quizplus · Accepted Answer

Securities markets are generally considered efficient according to the Efficient Market Hypothesis, which states that at any given time, prices fully reflect all available information. This efficiency is a reason why indexing, which relies on the market's overall performance rather than picking individual stocks, can be effective. The other options (A, C, D) are reasons why indexing works, such as lower costs and tax advantages.

Which of the Following Is Not a Reason Why Indexing