In an efficient market, it is not necessary for a portfolio manager to:
A) determine and quantify the risk preferences of a client.
B) minimize total transaction costs.
C) ascertain the tax implications of alternative investments.
D) attempt to maximize the portfolio's rate of return by superior market timing.

Question

Quizplus · Accepted Answer

In an efficient market, all available information is already reflected in stock prices, making it impossible to consistently achieve higher returns through market timing. Therefore, attempting to maximize the portfolio's rate of return by superior market timing is not necessary.

In an Efficient Market, It Is Not Necessary for a Portfolio