If the efficient market hypothesis is correct,then
A) index funds should typically beat managed funds,and usually do.
B) index fund should typically beat managed funds,but usually do not.
C) mutual funds should typically beat index funds,and usually do.
D) mutual funds should typically bet index funds,but usually do not.

Question

Quizplus · Accepted Answer

If the efficient market hypothesis is correct, then all relevant information is already reflected in the prices of securities, making it difficult for investors to consistently outperform the market. Therefore, a passive investment strategy such as investing in index funds that track the overall market should be more effective than active management by mutual funds. Research has shown that index funds tend to outperform managed funds over the long-term, supporting choice A.

If the Efficient Market Hypothesis Is Correct,then