The performance of index funds
A) is seldom,if ever,superior to the performance of actively-managed funds.
B) provides evidence in support of the notion that stock prices do not depend upon supply and demand.
C) provides evidence in support of the efficient markets hypothesis.
D) provides evidence in support of the notion that stock-market participants are irrational.

Question

Quizplus · Accepted Answer

The performance of index funds provides evidence in support of the efficient markets hypothesis, which suggests that stock prices reflect all available information and that it is difficult for investors to consistently outperform the market through active management. Index funds aim to replicate the performance of a specific market index and therefore provide an easy and low-cost way to invest in the overall market. The fact that index funds often outperform actively-managed funds demonstrates that it is difficult for fund managers to consistently beat the market, supporting the idea that stock prices are already efficient and accurately reflect all available information.

The Performance of Index Funds