If semistrong,or strong,form efficiency exists,then,on average,investors are probably best served by
A)investing based solely on a stock's past performance.
B)avoiding all mutual funds.
C)avoiding the stock market altogether.
D)investing in index funds rather than in actively managed mutual funds.
E)randomly purchasing stocks by just throwing darts.

Question

Quizplus · Accepted Answer

If semistrong or strong form efficiency exists, it means that all publicly available information is already reflected in the stock price. This makes it difficult for investors to consistently outperform the market through stock selection. Therefore, investing in index funds, which track the performance of a market index, is likely the best choice for investors. Avoiding mutual funds or the stock market altogether is not necessarily a recommended strategy, and randomly purchasing stocks is not a sound investment approach.

If Semistrong,or Strong,form Efficiency Exists,then,on Average,investors Are Probably Best Served