If the financial markets are efficient, then:
A) your investment return is highly dependent upon your security selection.
B) holding a diversified, low-cost, passively-managed portfolio is probably your best investment strategy.
C) you should adopt an investment strategy based on market timing.
D) having a professional manager who actively trades your portfolio is most likely your best
E) you should hire a professional money manager, regardless of the cost to do so.

Question

Quizplus · Accepted Answer

If the financial markets are efficient, it means that all available information is already reflected in the prices of securities. Therefore, it is difficult for individual investors to consistently outperform the market by picking individual stocks or timing the market. As a result, holding a diversified, low-cost, passively-managed portfolio is likely to provide the best investment returns.

If the Financial Markets Are Efficient, Then