If the securities market is efficient,an investor need only throw darts at the equity pages to pick securities and be just as well off.

Question

Quizplus · Accepted Answer

The statement is false because even in an efficient market, investors may not have the desirable risk-return combination in their portfolio, which requires active management and analysis. The efficient market hypothesis suggests that all available information is already reflected in stock prices, but it does not eliminate the importance of portfolio management and asset allocation. Therefore, throwing darts at the equity pages would not necessarily result in a well-diversified and optimal portfolio.

If the Securities Market Is Efficient,an Investor Need Only Throw