Which of the following statements are correct?
I.Many professional fund managers are paid well but fail to outperform as expected.
II.Professional fund managers that have tenures in excess of ten years,tend to consistently outperform the market on a long-term basis.
III.If a market is truly efficient,then all investments in that market are zero net present value opportunities.
IV.Actively managing a fund appears to be the key to outperforming the market.
A)I and III only
B)II and IV only
C)II and III only
D)I, II, and III only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

Statement I is correct as it is a well-known fact that not all professional fund managers are able to outperform the market despite being paid well.
Statement II is not completely true as there may be instances where professional fund managers may underperform even with a tenure of over ten years. Therefore, it is not an absolute rule.
Statement III is correct as the efficient market hypothesis suggests that all investments in a market are zero net present value opportunities as they reflect all available information.
Statement IV is not necessarily true as passive investing has been known to outperform actively managed funds in certain markets.

Which of the Following Statements Are Correct