The implication of efficient capital markets and a lack of superior analysts have led to the introduction of
A) Balanced funds.
B) Naive funds.
C) January funds.
D) Index funds.
E) Futures options.

Question

Quizplus · Accepted Answer

Efficient capital markets assume that all available information is already reflected in the stock prices, making it difficult for analysts to outperform the market consistently. This has led to the popularity of passive investment strategies such as index funds, which aim to track the performance of a market index rather than beat it. Therefore, the introduction of index funds is a direct result of efficient capital markets and the lack of superior analysts.

The Implication of Efficient Capital Markets and a Lack of Superior