An investor who picks a portfolio by throwing darts at the financial pages:
A) believes that efficient markets will protect the portfolio from harm as all information is priced.
B) believes that riskier portfolios earn the same as less risky portfolios.
C) does so because stock prices do not matter; only cash flow generated matters.
D) Both believes that efficient markets will protect the portfolio from harm as all information is priced; and does so because stock prices do not matter; and only cash flow generated matters.
E) Both believes that riskier portfolios earn the same as less risky portfolios; and does so because stock prices do not matter; and only cash flow generated matters.

Question

Quizplus · Accepted Answer

An investor who picks a portfolio by throwing darts at the financial pages believes in the efficient market hypothesis, which states that all available information is already reflected in stock prices. This means that any randomly chosen portfolio should theoretically perform just as well as a carefully selected one. Therefore, this investor believes that efficient markets will protect the portfolio from harm as all information is priced.

An Investor Who Picks a Portfolio by Throwing Darts at the Financial