The efficient market hypothesis says that,on average,professional investors will
A)tend to earn below average rates of returns.
B)earn a normal rate of return.
C)outperform investors with inside information.
D)tend to outperform most market participants.
E)earn the same rate of return over time regardless of the risk assumed.

Question

Quizplus · Accepted Answer

The efficient market hypothesis states that all public information is already reflected in the current stock prices, making it impossible for any investor, whether professional or amateur, to outperform the market consistently over time. As a result, professional investors will earn a normal rate of return on average, i.e., they will neither underperform nor outperform the market. Therefore, option B is the correct choice.

The Efficient Market Hypothesis Says That,on Average,professional Investors Will