According to proponents of the efficient-market hypothesis, the best strategy for a small investor with a portfolio worth $40,000 is probably to
A) perform fundamental analysis.
B) exploit market anomalies.
C) invest in Treasury securities.
D) invest in derivative securities.
E) invest in mutual funds.

Question

Quizplus · Accepted Answer

The efficient-market hypothesis (EMH) suggests that all available information is already reflected in stock prices, making it difficult for investors to consistently outperform the market through stock selection or market timing. For a small investor, investing in mutual funds, particularly index funds, is often recommended as it provides diversification and follows the market's overall performance, aligning with the EMH perspective that beating the market consistently is unlikely.

According to Proponents of the Efficient-Market Hypothesis, the Best Strategy