The efficient markets hypothesis predicts that stock prices follow a "random walk." The implication of this hypothesis for investing in stocks is
A)a "churning strategy" of buying and selling often to catch market swings.
B)turning over your stock portfolio each month,selecting stocks by throwing darts at the stock page.
C)a "buy and hold strategy" of holding stocks to avoid brokerage commissions.
D)following the advice of technical analysts.

Question

Quizplus · Accepted Answer

The efficient markets hypothesis suggests that it is difficult to consistently outperform the market by timing trades or selecting individual stocks. Therefore, a "buy and hold strategy" of holding a diversified portfolio of stocks may be the most effective approach, especially considering that frequent trading can lead to higher transaction costs and taxes.

The Efficient Markets Hypothesis Predicts That Stock Prices Follow a "Random