If markets are efficient, asset allocation is __________ important and security selection is __________ important.
A) more; more
B) more; less
C) less; less
D) less; more
E) Market efficiency is unrelated to asset allocation or security selection.

Question

Quizplus · Accepted Answer

In efficient markets, prices reflect all available information, making it difficult to consistently outperform the market through security selection. Therefore, asset allocation becomes more important as it determines the risk-return profile of an investment portfolio, while security selection becomes less important.

If Markets Are Efficient, Asset Allocation Is __________ Important and Security