Which of the following does not support the efficient-market hypothesis?
A) Index funds
B) Mutual funds
C) Bonds
D) Asset price bubbles

Question

Quizplus · Accepted Answer

The occurrence of asset price bubbles contradicts the efficient-market hypothesis which assumes that all available information about an asset is always reflected in its current market price, and therefore, it is impossible to consistently beat the market. The existence of asset price bubbles suggests that market prices do not always reflect all available information and can deviate significantly from their intrinsic or fundamental value. On the other hand, index funds, mutual funds, and bonds support the efficient-market hypothesis as they rely on the assumption that the market price of an asset accurately represents its underlying value, and their returns are not based on outperforming the market but rather on passive investment strategies.

Which of the Following Does Not Support the Efficient-Market Hypothesis