Which of the following statements about capital markets is true?
A) Systematic risk refers to the risk arising from a firm's financing decision.
B) Returns of high-beta stocks tend to vary less than overall market prices.
C) The efficient market hypothesis states that it is not possible to consistently 'beat the market' by using publicly available information.
D) If the efficient market hypothesis were true,it would be impossible to make money in the stock market.

Question

Quizplus · Accepted Answer

The efficient market hypothesis states that all publicly available information is reflected in prices, making it impossible to consistently outperform the market.

Option A is incorrect because systematic risk pertains to the overall market risk, not the financing decisions of a specific firm.

Option B is incorrect as high-beta stocks tend to have more volatile returns than the overall market.

Option D is incorrect as the efficient market hypothesis does not imply that making money in the stock market is impossible, but rather that it is challenging to do so in a consistent and predictable manner.

Which of the Following Statements About Capital Markets Is True