Proponents of the EMH typically advocate
A)buying individual stocks on margin and trading frequently.
B)investing in hedge funds.
C)a passive investment strategy.
D)A and B
E)B and C

Question

Quizplus · Accepted Answer

Proponents of the EMH believe that markets are efficient and that information is quickly and accurately incorporated into stock prices. Thus, they advocate for a passive investment strategy, such as investing in index funds or ETFs, rather than trying to beat the market through individual stock selection or active trading. Investing in hedge funds, as option B suggests, is not necessarily aligned with the EMH as these funds often engage in active trading in order to generate alpha. Option A, buying individual stocks on margin and trading frequently, is also not aligned with the EMH as it assumes that market inefficiencies can be exploited through active trading. Therefore, option C, a passive investment strategy, is the best choice.

Proponents of the EMH Typically Advocate