Which statement is consistent with the efficient markets hypothesis?
A) The majority of stock mutual funds cannot outperform stock composite indexes.
B) No mutual funds can outperform stock composite indexes at any time.
C) No one can earn a return in the stock market.
D) Technical analysis is the only way to beat the market over time.

Question

Quizplus · Accepted Answer

The efficient markets hypothesis suggests that all stock prices fully reflect all available information and that it is impossible to consistently outperform the market through stock picking or market timing. Therefore, option A, which states that the majority of stock mutual funds cannot outperform stock composite indexes, is consistent with the efficient markets hypothesis. Option B goes too far in suggesting that no mutual funds can ever outperform, while option C is simply incorrect. Option D suggests that it is possible to beat the market through technical analysis, which goes against the efficient markets hypothesis.

Which Statement Is Consistent with the Efficient Markets Hypothesis